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Bargaining by Limiting Cooperation: Withholding Consent for the Level of a Public Good




This paper analyzes how the ability to limit cooperation influences the outcome of complete information bargaining between two players. When cooperation involves prompt resolution of a conflict, as in alternating-offer games and wars-of-attrition, the solutions equate the marginal rates of substitution between earlier resolution and more private goods. When cooperation involves consent for the level of a public good, the outcome again equates the marginal rates of substitution between greater cooperation (more public good) and more private goods (lower cost shares). Here, the equilibrium consists of balanced linear cost shares given by the ratio of marginal-willingness-to-pay to marginal cost. Copyright © 2008 Wiley Periodicals, Inc..

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  • Peter S. Burton, 2008. "Bargaining by Limiting Cooperation: Withholding Consent for the Level of a Public Good," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(4), pages 623-642, August.
  • Handle: RePEc:bla:jpbect:v:10:y:2008:i:4:p:623-642

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    References listed on IDEAS

    1. Groves, Theodore & Ledyard, John O, 1977. "Optimal Allocation of Public Goods: A Solution to the "Free Rider" Problem," Econometrica, Econometric Society, vol. 45(4), pages 783-809, May.
    2. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
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    4. Muthoo, Abhinay, 1992. "Revocable Commitment and Sequential Bargaining," Economic Journal, Royal Economic Society, vol. 102(411), pages 378-387, March.
    5. Pearce, David G, 1984. "Rationalizable Strategic Behavior and the Problem of Perfection," Econometrica, Econometric Society, vol. 52(4), pages 1029-1050, July.
    6. Kornhauser, Lewis & Rubinstein, Ariel & Wilson, Charles, 1989. "Reputation and Patience in the 'War of Attrition.'," Economica, London School of Economics and Political Science, vol. 56(221), pages 15-24, February.
    7. Tian, Guoqiang, 2000. "Implementation of balanced linear cost share equilibrium solution in Nash and strong Nash equilibria," Journal of Public Economics, Elsevier, vol. 76(2), pages 239-261, May.
    8. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    9. Anat R. Admati & Motty Perry, 1991. "Joint Projects without Commitment," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 259-276.
    10. Groves, Theodore & Ledyard, John O, 1980. "The Existence of Efficient and Incentive Compatible Equilibria with Public Goods," Econometrica, Econometric Society, vol. 48(6), pages 1487-1506, September.
    11. Varian, Hal R, 1994. "A Solution to the Problem of Externalities When Agents Are Well-Informed," American Economic Review, American Economic Association, vol. 84(5), pages 1278-1293, December.
    12. Mas-Colell, Andreu & Silvestre, Joaquim, 1989. "Cost share equilibria: A Lindahlian approach," Journal of Economic Theory, Elsevier, vol. 47(2), pages 239-256, April.
    13. Roth, David, 1996. "Rationalizable Predatory Pricing," Journal of Economic Theory, Elsevier, vol. 68(2), pages 380-396, February.
    14. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
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