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Bargaining by Limiting Cooperation: Withholding Consent for the Level of a Public Good

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  • PETER S. BURTON

Abstract

This paper analyzes how the ability to limit cooperation influences the outcome of complete information bargaining between two players. When cooperation involves prompt resolution of a conflict, as in alternating‐offer games and wars‐of‐attrition, the solutions equate the marginal rates of substitution between earlier resolution and more private goods. When cooperation involves consent for the level of a public good, the outcome again equates the marginal rates of substitution between greater cooperation (more public good) and more private goods (lower cost shares). Here, the equilibrium consists of balanced linear cost shares given by the ratio of marginal‐willingness‐to‐pay to marginal cost.

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  • Peter S. Burton, 2008. "Bargaining by Limiting Cooperation: Withholding Consent for the Level of a Public Good," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(4), pages 623-642, August.
    • Handle: RePEc:bla:jpbect:v:10:y:2008:i:4:p:623-642
    DOI: 10.1111/j.1467-9779.2008.00379.x
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