We study Nash equilibria of joint production games under a mixed output sharing rule in which part of the output (the mixing parameter) is shared in proportion to inputs and the rest according to exogenously determined shares. This rule includes proportional sharing and equal sharing as special cases. We show that this game has a unique equilibrium and discuss comparative statics. When the game is large, players unanimously prefer the same value of the mixing parameter: the equilibrium value of the elasticity of production. For this value, equilibrium input and output are fully efficient. Our approach exploits the fact that payoffs in the joint production game are a function only of a player’s input and the aggregate input and has independent interest as it readily extends to other ‘‘aggregative games’’.
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Paper provided by Centre for Economic Research, Keele University in its series Keele Economics Research Papers with number
KERP 2002/16.
Length: 39 pages Date of creation: Sep 2002 Date of revision: Handle: RePEc:kee:kerpuk:2002/16
Note: The work of the first author was supported by a Leverhulme Research Fellowship. We would like to thank Wolfgang Buchholz, Jurgen Eichberger, Gauthier Lanot, Todd Sandler, Henry Tulkens and members of seminars at the University of Melbourne and the Australian National University for helpful and encouraging comments on earlier drafts. Contact details of provider: Postal: Department of Economics, University of Keele, Keele, Staffordshire, ST5 5BG - United Kingdom Phone: +44 (0)1782 584581 Fax: +44 (0)1782 717577 Email: Web page: http://www.keele.ac.uk/depts/ec/cer/ More information through EDIRC
Order Information: Postal: Centre for Economic Research, Research Institute for Public Policy and Management, Keele University, Staffordshire ST5 5BG - United Kingdom Email: Web: http://www.keele.ac.uk/depts/ec/cer/pubs_kerps.htm
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Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
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