Asymmetric Contributions from Identical Agents in a Local Interaction Model
AbstractThe main findings of the theory on the private provision of public goods under the assumptions of identical individuals and normality of both the public good and private consumption are that: 1) there exists a unique Nash equilibrium pattern of contributions in which everybody contributes the same amount; 2) this pattern is stable. We show that these findings no longer hold in a context characterized by local interaction. Individuals are distributed around a circle and enjoy the level of public good contributed in their neighborhood. Each individual belongs to a neighborhood defined as the first k individuals on her right, the first k individuals on her left, and herself. In this context, it is always possible to find preferences satisfying the assumption of normality such that the symmetric Nash equilibrium is unstable, and there exists at least one asymmetric Nash equilibrium which is locally stable.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy in its series ISLA Working Papers with number 24.
Length: 23 pages
Date of creation: Aug 2006
Date of revision: Mar 2007
Contact details of provider:
Postal: via Sarfatti, 25 - 20136 Milano - Italy
Web page: http://www.isla.unibocconi.it/
Local Interaction; Public Goods; Nash Equilibria.;
Find related papers by JEL classification:
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-14 (All new papers)
- NEP-MIC-2006-10-14 (Microeconomics)
- NEP-PBE-2006-10-14 (Public Economics)
- NEP-PUB-2006-10-14 (Public Finance)
- NEP-SOC-2006-10-14 (Social Norms & Social Capital)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Glen Ellison, 2010.
"Learning, Local Interaction, and Coordination,"
Levine's Working Paper Archive
391, David K. Levine.
- Cornes, Richard & Sandler, Todd, 1984. "Easy Riders, Joint Production, and Public Goods," Economic Journal, Royal Economic Society, vol. 94(375), pages 580-98, September.
- Francis Bloch & Unal Zenginobuz, 2007.
"The effect of spillovers on the provision of local public goods,"
Review of Economic Design,
Springer, vol. 11(3), pages 199-216, November.
- Bloch, Francis & Zenginobuz, Unal, 2004. "The Effect of Spillovers on the Provision of Local Public Goods," MPRA Paper 186, University Library of Munich, Germany, revised 05 Oct 2006.
- Bloch, Francis & Zenginobuz, E. Unal, 2006. "Tiebout equilibria in local public good economies with spillovers," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1745-1763, September.
- M. Bilodeau & N. Gravel, 1997.
"Voluntary provision of a public good and individual morality,"
THEMA Working Papers
97-31, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Bilodeau, Marc & Gravel, Nicolas, 2004. "Voluntary provision of a public good and individual morality," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 645-666, March.
- Bilodeau, M. & Gravel, N., 1997. "Voluntary Provision of a Public Good and Individual Morality," Papers 9731, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
- Diamond, Peter, 2006. "Optimal tax treatment of private contributions for public goods with and without warm glow preferences," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 897-919, May.
- Sandmo, Agnar, 1980. "Anomaly and Stability in the Theory of Externalities," The Quarterly Journal of Economics, MIT Press, vol. 94(4), pages 799-807, June.
- Cornes, Richard, 1979. "External Effects : An Alternative Formulation," The Warwick Economics Research Paper Series (TWERPS) 159, University of Warwick, Department of Economics.
- Scotchmer, Suzanne, 2002. "Local public goods and clubs," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 29, pages 1997-2042 Elsevier.
- Warr, Peter G., 1983. "The private provision of a public good is independent of the distribution of income," Economics Letters, Elsevier, vol. 13(2-3), pages 207-211.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stefano Riela).
If references are entirely missing, you can add them using this form.