Cooperative decision-making for the provision of a locally undesirable facility
AbstractWe consider the decentralized provision of a global public good with local external- ities in a spatially explicit model. Communities decide on the location of a facility that benefits everyone but exhibits costs to the host and its neighbors. They share the costs through transfers. We examine the cooperative game associated with this so-called NIMBY ("Not In My Back-Yard") problem. We derive and discuss conditions for core solutions to exist. These conditions are driven by the temptation to exclude groups of neighbors at any potential location. We illustrate the results in different spatial settings. In particular, we construct a hypothetical example on a real administrative unit in which the core is shown to be empty. These results clarify how property rights can affect cooperation and shed further light on a limitation of the Coase theorem.
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Bibliographic InfoPaper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 14-480.
Date of creation: 26 Mar 2014
Date of revision:
NIMBY; externality; Coase theorem; pollution; waste; core; cooperative game; spatial model.;
Find related papers by JEL classification:
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-04-29 (All new papers)
- NEP-CDM-2014-04-29 (Collective Decision-Making)
- NEP-ENV-2014-04-29 (Environmental Economics)
- NEP-GEO-2014-04-29 (Economic Geography)
- NEP-GTH-2014-04-29 (Game Theory)
- NEP-URE-2014-04-29 (Urban & Real Estate Economics)
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