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On the strategic non-complementarity of complements

Author

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  • Martin Gregor

    () (IES, Charles University)

Abstract

This paper examines the equilibrium provision of a public good if the private monetary contributions of identical agents are (im)pure complements. To reconcile complementarity in contributions with the apparent substitutability of monetary payments, we assume a setup with multiple inputs into a complementary production function. This paper proves the uniqueness and symmetry of the equilibrium for any impure complementarity if each agent is permitted to contribute to any input in the equilibrium, contributions are strategic substitutes. Only pure complementarity exhibits multiple equilibria, where contributions are either strategic substitutes or strategic complements.

Suggested Citation

  • Martin Gregor, 2008. "On the strategic non-complementarity of complements," Economics Bulletin, AccessEcon, vol. 8(3), pages 1-7.
  • Handle: RePEc:ebl:ecbull:eb-08h00002
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    File URL: http://www.accessecon.com/pubs/EB/2008/Volume8/EB-08H00002A.pdf
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    References listed on IDEAS

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    1. Giovanna Devetag & Andreas Ortmann, 2007. "When and why? A critical survey on coordination failure in the laboratory," Experimental Economics, Springer;Economic Science Association, vol. 10(3), pages 331-344, September.
    2. Vicary, Simon & Sandler, Todd, 2002. "Weakest-link public goods: Giving in-kind or transferring money," European Economic Review, Elsevier, vol. 46(8), pages 1501-1520, September.
    3. Scott Barrett, 2003. "Global Disease Eradication," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 591-600, 04/05.
    4. Richard Cornes, 1993. "Dyke Maintenance and Other Stories: Some Neglected Types of Public Goods," The Quarterly Journal of Economics, Oxford University Press, vol. 108(1), pages 259-271.
    5. Bergstrom, Ted C. & Blume, Larry & Varian, Hal, 1992. "Uniqueness of Nash equilibrium in private provision of public goods : An improved proof," Journal of Public Economics, Elsevier, vol. 49(3), pages 391-392, December.
    6. Martin Gregor & Lenka Gregorov√°, 2007. "Inefficient centralization of imperfect complements," Working Papers IES 2007/19, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jun 2007.
    7. Sandler, Todd & Vicary, Simon, 2001. "Weakest-link public goods: giving in-kind or transferring money in a sequential game," Economics Letters, Elsevier, vol. 74(1), pages 71-75, December.
    8. Sebastian G. Kessing, 2007. "Strategic Complementarity in the Dynamic Private Provision of a Discrete Public Good," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(4), pages 699-710, August.
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    Cited by:

    1. Martin Gregor, 2011. "Tradeoffs of foreign assistance for the weakest-link global public goods," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(2), pages 233-251, April.

    More about this item

    JEL classification:

    • H0 - Public Economics - - General
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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