Producers and Predators in a Multiple Community Setting
This paper analyzes an extension of a model of production and predation due to Grossman (1998) to a multiple community setting. In a multiple community setting, defense expenditures in any one community have the property of a local public good. Such expenditures produce effects on other communities. These effects include changes in the distribution of population among communities, the redistribution of predatory effort over communities, and an induced change in the predator/producer ratio in the economy as a whole. The question we address is whether the level of defense chosen by local governments so as to maximize the per capita consumption of their own producers, given defense levels elsewhere, always produces a second-best outcome. Our analysis shows that if the number of communities is fixed, fully rational local government decision-making leads to the same level of defense activity and equilibrium per capita consumption as would be chosen by a central planner. However, if individual local governments are boundedly rational, in the sense that they do not anticipate the effects of their own defense activity on the equilibrium predator/producer ratio and distribution of producer activity, then competition among local governments never achieves a first-best outcome. Furthermore, the equilibrium associated with competition among boundedly rational local governments can sometimes yield a lower consumption per capita in equilibrium than would be achieved if there were no local governments and each agent who chose to be a producer also chose his/her own level of defense.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 4 (2004)
Issue (Month): 1 (May)
|Contact details of provider:|| Web page: http://www.degruyter.com |
|Order Information:||Web: http://www.degruyter.com/view/j/bejeap|
When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:topics.4:y:2004:i:1:n:11. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.