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Bayesian Equilibrium in a Public Good Economy

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  • SHLOMIT HON‐SNIR
  • BENYAMIN SHITOVITZ
  • MENAHEM SPIEGEL

Abstract

This paper studies the provision of a public good via voluntary contributions in an economy with uncertainty and differential information. Consumers differ in their private information regarding their future endowment as well as in their preferences. Each consumer selects her consumption ex ante, i.e., before knowing the state of nature. Contributions to the provision of the public good are determined ex post, i.e., when the state of nature is realized. Assuming that some normality conditions hold, a Bayesian equilibrium exists. Further, equilibrium is unique, regardless of the number of consumers, when either (1) the information partitions of consumers can be ranked from the finest to the coarsest, or (2) there are only two types of consumers.

Suggested Citation

  • Shlomit Hon‐Snir & Benyamin Shitovitz & Menahem Spiegel, 2010. "Bayesian Equilibrium in a Public Good Economy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(2), pages 387-398, April.
  • Handle: RePEc:bla:jpbect:v:12:y:2010:i:2:p:387-398
    DOI: 10.1111/j.1467-9779.2010.01456.x
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    File URL: https://doi.org/10.1111/j.1467-9779.2010.01456.x
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    References listed on IDEAS

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    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, September.
    2. Einy, Ezra & Haimanko, Ori & Moreno, Diego & Shitovitz, Benyamin, 2010. "On the existence of Bayesian Cournot equilibrium," Games and Economic Behavior, Elsevier, vol. 68(1), pages 77-94, January.
    3. Bernheim, B Douglas, 1986. "On the Voluntary and Involuntary Provision of Public Goods," American Economic Review, American Economic Association, vol. 76(4), pages 789-793, September.
    4. Chokler, Adi & Hon-Snir, Shlomit & Kim, Moshe & Shitovitz, Benyamin, 2006. "Information disadvantage in linear Cournot duopolies with differentiated products," International Journal of Industrial Organization, Elsevier, vol. 24(4), pages 785-793, July.
    5. Donald C. Keenan & Iltae Kim & Ronald S. Warren, 2006. "The Private Provision of Public Goods under Uncertainty: A Symmetric‐Equilibrium Approach," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(5), pages 863-873, December.
    6. Einy, Ezra & Moreno, Diego & Shitovitz, Benyamin, 2003. "The value of public information in a Cournot duopoly," Games and Economic Behavior, Elsevier, vol. 44(2), pages 272-285, August.
    7. Einy, Ezra & Moreno, Diego & Shitovitz, Benyamin, 2002. "Information Advantage in Cournot Oligopoly," Journal of Economic Theory, Elsevier, vol. 106(1), pages 151-160, September.
    8. 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.
    9. Gradstein, Mark, 1992. "Time Dynamics and Incomplete Information in the Private Provision of Public Goods," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 581-597, June.
    10. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    11. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-1277, November.
    12. Shitovitz, Benyamin & Spiegel, Menahem, 2001. "Stable Provision vs. Cournot-Nash Equilibria in Pure Public Good Economies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 3(2), pages 219-224.
    13. Gradstein, Mark & Nitzan, Shmuel & Slutsky, Steven, 1994. "Neutrality and the private provision of public goods with incomplete information," Economics Letters, Elsevier, vol. 46(1), pages 69-75, September.
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    Cited by:

    1. Einy, Ezra & Haimanko, Ori & Moreno, Diego & Shitovitz, Benyamin, 2010. "On the existence of Bayesian Cournot equilibrium," Games and Economic Behavior, Elsevier, vol. 68(1), pages 77-94, January.

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