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Cournot-Nash and Lindahl equilibria in pure public “bad” economies

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  • Benyamin Shitovitz
  • Menahem Spiegel

Abstract

Using a general equilibrium framework, this paper analyzes the equilibrium provision of a pure public bad commodity (for example pollution). Considering a finite economy with one desired private good and one pure public “bad” we explicitly introduce the concept of Lindahl equilibrium and the Lindahl prices into a pure public bad economy. Then, the Lindahl provision is analyzed and compared with the Cournot-Nash provision. The main results for economies with heterogeneous agents state that the asymptotic Lindahl allocation of the pure public bad is the null allocation. In contrast, the asymptotic Cournot-Nash provision of the public bad might approach infinity. Other results were obtained in concert with the broad analysis of the large finite economies with pure public bad commodities. Copyright Springer-Verlag Berlin Heidelberg 2003

Suggested Citation

  • Benyamin Shitovitz & Menahem Spiegel, 2003. "Cournot-Nash and Lindahl equilibria in pure public “bad” economies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(1), pages 17-31, August.
    • Handle: RePEc:spr:joecth:v:22:y:2003:i:1:p:17-31
    DOI: 10.1007/s00199-002-0282-y
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    Citations

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    Cited by:

    1. Delaney, Jason & Jacobson, Sarah, 2014. "Those outsiders: How downstream externalities affect public good provision," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 340-352.
    2. Sarah Jacobson & Jason Delaney, 2012. "The Good of the Few: Reciprocity in the Provision of a Public Bad," Department of Economics Working Papers 2012-02, Department of Economics, Williams College.
    3. Delaney, Jason & Jacobson, Sarah, 2015. "The good of the few: Reciprocal acts and the provision of a public bad," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 58(C), pages 46-55.
    4. L.F.M. Groot & J. Swart, 2015. "From Nash to Lindahl in Climate Change Policy," Working Papers 15-01, Utrecht School of Economics.
    5. Nicholas Wilson, 2012. "Shock to the System: Prevention of Mother-to-Child Transmission of HIV and Child Mortality," Department of Economics Working Papers 2012-03, Department of Economics, Williams College, revised Jul 2013.
    6. Loek Groot & Julia Swart, 2018. "Climate change control: the Lindahl solution," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 23(5), pages 757-782, June.

    More about this item

    Keywords

    Keywords and Phrases: Public commodities; Public bad; General equilibrium; Cournot-Nash; Lindahl equilibrium; Provision of public bad.; JEL Classification Numbers: C72; H41.;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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