A Strategic market game approach for the private provision of public goods
AbstractBergstrom, Blume and Varian (1986) provides an elegant game-theoretic model of an economy with one private good and one public good. Strategies of players consist of voluntary contributions of the private good to public good production. Without relying on first order conditions, the authors demonstrate existence of Nash equilibrium and an extension of Warr's neutrality result -- any redistribution of endowment that left the set of contributors unchanged would induce a new equilibrium with the same total public good provision. The assumption of one-private good greatly facilities the results. We provide analogues of the Bergstrom, Blume and Varian results in a model allowing multiple private and public goods. In addition, we relate the strategic market game equilibrium to the private provision of equilibrium of Villanaci and Zenginobuz (2005), which provides a counter-part to the Walrasian equilibrium for a public goods economy. Our techniques follow those of Dubey and Geanakoplos (2003), which itself grows out of the seminal work of Shapley and Shubik (1977). Our approach also incorporates, into the strategic market game literature, economies with production, not previously treated and, as a by-product, establishes a new existence of private-provision equilibrium.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 37777.
Date of creation: Dec 2009
Date of revision: 08 Mar 2012
Public goods; market games; equilibrium; Nash equilibrium; private provision; voluntary contributions;
Find related papers by JEL classification:
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
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