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Trading equilibrium in a public good economy with smooth preferences and a mixed measure space of consumers

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  • Perets, Hovav
  • Shitovitz, Benyamin
  • Spiegel, Menahem
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    Abstract

    Lindahl and Nash equilibria are often used in the theory of public good. Shitovitz and Spiegel (1998) present an example of 2-person economy with one private good and one pure public good, where the core efficient Lindahl allocation does not Pareto dominate the (inefficient) Nash allocation. In this paper we introduce the new concept of Trading equilibrium for a general public good economy with smooth preferences and a mixed measure space of consumers. We obtain that this economy admits a unique Trading equilibrium. Moreover, the Trading equilibrium induces a core allocation that strictly Pareto dominates the Nash allocation.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Mathematical Economics.

    Volume (Year): 48 (2012)
    Issue (Month): 3 ()
    Pages: 163-169

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    Handle: RePEc:eee:mateco:v:48:y:2012:i:3:p:163-169

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    Web page: http://www.elsevier.com/locate/jmateco

    Related research

    Keywords: Public good; Private provision of public good; Nash equilibrium; Mixed measure space of consumers;

    References

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    1. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, September.
    2. GABSZEWICZ, Jean J. & SHITOVITZ, Benjamin, . "The core in imperfectly competitive economies," CORE Discussion Papers RP -1013, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. D. K. Foley, 1967. "Lindahl's Solution and the Core of an Economy with Public Goods," Working papers 3, Massachusetts Institute of Technology (MIT), Department of Economics.
    4. Masahiro Okuno, 1977. "Oligopoly and Competition in Large Markets," Discussion Papers 305, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    5. Bernheim, B Douglas, 1986. "On the Voluntary and Involuntary Provision of Public Goods," American Economic Review, American Economic Association, vol. 76(4), pages 789-93, September.
    6. Busetto, Francesca & Codognato, Giulio & Ghosal, Sayantan, 2011. "Noncooperative oligopoly in markets with a continuum of traders," Games and Economic Behavior, Elsevier, vol. 72(1), pages 38-45, May.
    7. Artstein, Zvi, 1979. "A note on fatou's lemma in several dimensions," Journal of Mathematical Economics, Elsevier, vol. 6(3), pages 277-282, December.
    8. DEBREU, Gérard, . "Smooth preferences," CORE Discussion Papers RP -132, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Milleron, Jean-Claude, 1972. "Theory of value with public goods: A survey article," Journal of Economic Theory, Elsevier, vol. 5(3), pages 419-477, December.
    10. Shitovitz, Benyamin & Spiegel, Menahem, 1998. "Cournot-Nash and Lindahl Equilibria in Pure Public Good Economies," Journal of Economic Theory, Elsevier, vol. 83(1), pages 1-18, November.
    11. Codognato, Giulio & Gabszewicz, Jean J, 1993. "Cournot-Walras Equilibria in Markets with a Continuum of Traders," Economic Theory, Springer, vol. 3(3), pages 453-64, July.
    12. Shitovitz, Benyamin & Spiegel, Menahem, 2001. " Stable Provision vs. Cournot-Nash Equilibria in Pure Public Good Economies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 3(2), pages 219-24.
    13. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
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