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Nonmarket Institutional Structures: Conjectures, Distribution, and Allocative Efficiency

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  • Cauley, Jon
  • Sandler, Todd
  • Cornes, Richard

Abstract

This paper analyzes nonmarket institutional structure in which policymakers from two or more governments negotiate to commonly provide a pure public good or to internalize an externality. Various equilibrium notions for the linkage are examined, including Nash, non-Nash, and Pareto. The theoretical analysis indicates when distributional aspects can be separated from efficiency considerations for a nonmarket linkage. In addition, the authors demonstate that the likelihood of initial formation of such a linkage is related to the number of participants, the type of conjecture formed, and the mix between fixed and variable negotiation costs.

Suggested Citation

  • Cauley, Jon & Sandler, Todd & Cornes, Richard, 1986. "Nonmarket Institutional Structures: Conjectures, Distribution, and Allocative Efficiency," Public Finance = Finances publiques, , vol. 41(2), pages 153-172.
    • Handle: RePEc:pfi:pubfin:v:41:y:1986:i:2:p:153-72
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    Cited by:

    1. Silva, Emilson C. D. & Caplan, Arthur J., 1997. "Transboundary Pollution Control in Federal Systems," Journal of Environmental Economics and Management, Elsevier, vol. 34(2), pages 173-186, October.
    2. John R. Conlon & Paul Pecorino, 2022. "Public good provision with participation costs," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(2), pages 241-258, April.
    3. Caplan, Arthur J. & Cornes, Richard C. & Silva, Emilson C. D., 2000. "Pure public goods and income redistribution in a federation with decentralized leadership and imperfect labor mobility," Journal of Public Economics, Elsevier, vol. 77(2), pages 265-284, August.

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