Nash-Cournot or Lindahl Behavior? An Empirical Test for the NATO Allies
This paper derives systems of demand equations for distinguishing between Nash-Cournot and Lindahl behavior in a group that either shares a pure public good or an activity that provides a private and a pure public joint product. Systems of simultaneous equations are estimated based upon Nash-Cournot and Lindahl behavior for a sample of ten NATO allies for the 1956-87 period. Nonnested hypothesis tests support the Nash-Cournot specification for five of the ten sample allies. No evidence of Lindahl behavior is found. The Nash-Cournot joint-product specification outperforms the pure public model for all sample allies. Copyright 1990, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Volume (Year): 105 (1990)
Issue (Month): 4 (November)
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