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Trading equilibrium in a public good economy with smooth preferences and a mixed measure space of consumers

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  • Perets, Hovav
  • Shitovitz, Benyamin
  • Spiegel, Menahem

Abstract

Lindahl and Nash equilibria are often used in the theory of public good. Shitovitz and Spiegel (1998) present an example of 2-person economy with one private good and one pure public good, where the core efficient Lindahl allocation does not Pareto dominate the (inefficient) Nash allocation. In this paper we introduce the new concept of Trading equilibrium for a general public good economy with smooth preferences and a mixed measure space of consumers. We obtain that this economy admits a unique Trading equilibrium. Moreover, the Trading equilibrium induces a core allocation that strictly Pareto dominates the Nash allocation.

Suggested Citation

  • Perets, Hovav & Shitovitz, Benyamin & Spiegel, Menahem, 2012. "Trading equilibrium in a public good economy with smooth preferences and a mixed measure space of consumers," Journal of Mathematical Economics, Elsevier, vol. 48(3), pages 163-169.
  • Handle: RePEc:eee:mateco:v:48:y:2012:i:3:p:163-169
    DOI: 10.1016/j.jmateco.2012.02.001
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    References listed on IDEAS

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    1. 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.
    2. Debreu, Gerard, 1972. "Smooth Preferences," Econometrica, Econometric Society, vol. 40(4), pages 603-615, July.
    3. Codognato, Giulio & Gabszewicz, Jean J, 1993. "Cournot-Walras Equilibria in Markets with a Continuum of Traders," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(3), pages 453-464, July.
    4. Busetto, Francesca & Codognato, Giulio & Ghosal, Sayantan, 2011. "Noncooperative oligopoly in markets with a continuum of traders," Games and Economic Behavior, Elsevier, vol. 72(1), pages 38-45, May.
    5. Milleron, Jean-Claude, 1972. "Theory of value with public goods: A survey article," Journal of Economic Theory, Elsevier, vol. 5(3), pages 419-477, December.
    6. Foley, Duncan K, 1970. "Lindahl's Solution and the Core of an Economy with Public Goods," Econometrica, Econometric Society, vol. 38(1), pages 66-72, January.
    7. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    8. 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.
    9. Artstein, Zvi, 1979. "A note on fatou's lemma in several dimensions," Journal of Mathematical Economics, Elsevier, vol. 6(3), pages 277-282, December.
    10. Okuno, Masahiro & Postlewaite, Andrew & Roberts, John, 1980. "Oligopoly and Competition in Large Markets," American Economic Review, American Economic Association, vol. 70(1), pages 22-31, March.
    11. 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.
    12. Gabszewicz, Jean J. & Shitovitz, Benyamin, 1992. "The core in imperfectly competitive economies," Handbook of Game Theory with Economic Applications,in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 15, pages 459-483 Elsevier.
    13. Shitovitz, Benyamin & Spiegel, Menahem, 1998. "Cournot-Nash and Lindahl Equilibria in Pure Public Good Economies," Journal of Economic Theory, Elsevier, vol. 83(1), pages 1-18, November.
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    Cited by:

    1. Avishay Aiche & Hovav Perets & Benyamin Shitovitz, 2016. "Strategic and stable pollution with finite set of economic agents and a finite set of consumption commodities: a Pareto comparison," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(1), pages 53-59, April.

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