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A competitive equilibrium for a warm-glow economy

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  • Nizar Allouch

Abstract

The warm-glow model (Andreoni in J Political Econ 97:1447–1458, 1989 ; Econ J 100:464–477, 1990 ) of public goods provision has received widespread interest, yet surprisingly most attention has focused on the voluntary contribution equilibrium of the model, and only very little attention has been devoted to the competitive equilibrium. In this paper, we introduce the concept of competitive equilibrium for a warm-glow economy (henceforth, warm-glow equilibrium) and establish both existence and welfare properties. The warm-glow equilibrium concept may prove to be very useful to the normative and positive theory of public goods provision. First, it is a price-based mechanism achieving efficient outcomes. Second, not only could the warm-glow equilibria outcomes serve as a point of reference to measure free-riding and welfare loss but also, as suggested by Bernheim and Rangel (Behavioral Economics and Its Applications, 2007 ), in large economies they may be approximated by Walrasian equilibria outcomes. Copyright Springer-Verlag 2013

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  • Nizar Allouch, 2013. "A competitive equilibrium for a warm-glow economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(1), pages 269-282, May.
    • Handle: RePEc:spr:joecth:v:53:y:2013:i:1:p:269-282
    DOI: 10.1007/s00199-012-0689-z
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    Cited by:

    1. Nizar Allouch, 2010. "A Core‐Equilibrium Convergence in a Public Goods Economy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(4), pages 857-870, August.
    2. Carvajal, Andrés & Song, Xinxi, 2022. "Implementing Lindahl allocations in a warm-glow economy," Economics Letters, Elsevier, vol. 217(C).
    3. Carvajal, Andrés & Song, Xinxi, 2022. "A simple(r) Lindahl solution to the provision of public goods with warm-glow: Efficiency and implementation," Economics Letters, Elsevier, vol. 211(C).
    4. Carvajal, Andrés & Song, Xinxi, 2018. "Testing Pareto efficiency and competitive equilibrium in economies with public goods," Journal of Mathematical Economics, Elsevier, vol. 75(C), pages 19-30.
    5. Simone D'Alessandro & Domenico Fanelli, 2015. "The Role of Income Distribution in the Diffusion of Corporate Social Responsibility," Metroeconomica, Wiley Blackwell, vol. 66(2), pages 187-212, May.
    6. Vadim Cherepanov & Tim Feddersen & Alvaro Sandroni, 2013. "Revealed preferences and aspirations in warm glow theory," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(3), pages 501-535, November.

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    More about this item

    Keywords

    Warm-glow; Public goods provision; Competitive equilibrium; Lindahl equilibrium; Asymptotic provision; H4; D6;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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