Dynamic Cooperation in Local Public Goods Supply with Imperfect Monitoring
AbstractThis paper develops a two-country model where each country invests in a local public good generating positive cross-countries externalities. In a repeated game setting where the level of public good depends on a non-observable effort by each country plus a random shock, we characterize the existence condition of a cut-off trigger strategy equilibrium inducing full cooperation. Moreover, we show that introducing a small positive correlation between the two country-specific shocks gives rise to a manipulation of information thereby restricting the prospects of cooperation.
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Bibliographic InfoPaper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 527.
Date of creation: Jul 2008
Date of revision:
Publication status: Published in Annales d'Économie et de Statistique, vol.�101, Institut national de la statistique et des études économiques, Paris, 2011, p.�327-346.
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- Guillaume CHEIKBOSSIAN & Wilfried SAND-ZANTMAN, 2011. "Dynamic Cooperation in Local Public Goods Supply with Imperfect Monitoring," Annales d'Economie et de Statistique, ENSAE, issue 101-102, pages 327-346.
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-10-21 (All new papers)
- NEP-GTH-2008-10-21 (Game Theory)
- NEP-PBE-2008-10-21 (Public Economics)
- NEP-URE-2008-10-21 (Urban & Real Estate Economics)
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