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Households, Markets and Public Choice

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  • Hans Gersbach
  • Hans Haller

Abstract

We develop a model that combines competitive exchange of private commodities across endogenously formed groups with public good provision and global collective decisions. There is a tension between local and global collective decisions. In particular, we show that group formation and collective decisions on public goods may destabilize each other, even if there exist favorable conditions for matching on the one hand, and for global collective decisions on the other hand. We establish sufficient conditions for the existence of competitive equilibria with endogenous household formation and public choice.

Suggested Citation

  • Hans Gersbach & Hans Haller, 2014. "Households, Markets and Public Choice," CESifo Working Paper Series 4947, CESifo.
    • Handle: RePEc:ces:ceswps:_4947
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    References listed on IDEAS

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    Cited by:

    1. Gersbach, Hans & Haller, Hans, 2019. "Households, markets and public choice," Mathematical Social Sciences, Elsevier, vol. 100(C), pages 16-28.

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    More about this item

    Keywords

    household formation; matching; general equilibrium; public goods; public choice; median voter theorem;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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