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Voluntary Provision of a Public Good in a Strategic Market Game

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  • Somdeb LAHIRI

Abstract

The purpose of this paper is to investigate the mutual compatibility of the voluntary provision of a public good and the strategic behavior of consumers in the market for private goods. We study the existence of equilibrium in the private provision of a public good within a general strategic equilibrium framework with a finite number of players. The mechanism for the provision of public good follows that of Bergstrom, Blume, and Varian (1986), and the trading mechanism for private goods follows the strategic market game with wash sales of Dubey and Shubik (1986). The paper demonstrates the existence of an equilibrium point in pure strategies for a finite number of players. Due to the existence of trivial equilibria at which all markets are closed, equilibrium points are constructed as limits to sequences of ? - equilibria in perturbed games.

Suggested Citation

  • Somdeb LAHIRI, 2013. "Voluntary Provision of a Public Good in a Strategic Market Game," Discussion Papers (REL - Recherches Economiques de Louvain) 2013043, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvre:2013043
    Note: Special Issue : Recent Developments in Strategic Interactions and General Equilibrium
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    Keywords

    Strategic market game; Public good; Equilibrium points;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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