Leadership in Public Good Provision: a Timing Game Perspective
We address in this paper the issue of leadership when two governments provide public goods to their constituencies with cross border externalities as both public goods are valued by consumers in both countries. We study a timing game between two different countries: before providing public goods, the two policymakers non-cooperatively decide their preferred sequence of moves. We establish conditions under which a first- or second-mover advantage emerges for each country, highlighting the role of spillovers and the strategic complementarity or substitutability of public goods. As a result we are able to prove that there is no leader when, for both countries, public goods are substitutable. When public goods are complements for both countries, both countries may emerge as the leader in the game. Hence a coordination issue arises. We use the notion of risk-dominance to select the leading government. Lastly, in the mixed case, the government for whom public goods are substitutable becomes the leader.
|Date of creation:||2008|
|Contact details of provider:|| Postal: 65 Bd. F. Mitterrand, 63000 Clermont-Ferrand|
Phone: (33-4) 73 17 74 00
Fax: (33-4) 73 17 74 28
Web page: http://cerdi.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, July.
- Redoano, Michela & Scharf, Kimberly A., 2004.
"The political economy of policy centralization: direct versus representative democracy,"
Journal of Public Economics,
Elsevier, vol. 88(3-4), pages 799-817, March.
- Michela Redoano & Kimberley Ann Scharf, 2001. "The Political Economy of Policy Centralization: Direct Versus Representative Democracy," CESifo Working Paper Series 602, CESifo Group Munich.
- Redoano, Michela & Scharf, Kimberley, 2002. "The Political Economy of Policy Centralization: Direct Versus Representative Democracy," CEPR Discussion Papers 3631, C.E.P.R. Discussion Papers.
- Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, vol. 2(1), pages 29-46, March.
- Hamilton, J.H. & Slutsky, S.M., 1988. "Endogenous Timing In Duopoly Games: Stackelberg Or Cournot Equilibria," Papers 88-4, Florida - College of Business Administration.
- Ben Lockwood, 2002. "Distributive Politics and the Costs of Centralization," Review of Economic Studies, Oxford University Press, vol. 69(2), pages 313-337.
- Lockwood, Ben, 1998. "Distributive Politics and the Costs of Centralization," CEPR Discussion Papers 2046, C.E.P.R. Discussion Papers.
- Mailath George J., 1993. "Endogenous Sequencing of Firm Decisions," Journal of Economic Theory, Elsevier, vol. 59(1), pages 169-182, February.
- Hubert Kempf & Emmanuelle Taugourdeau, 2005. "Dépenses publiques dans une économie à deux pays : Stackelberg versus Nash," Annals of Economics and Statistics, GENES, issue 77, pages 173-185.
- Hubert Kempf & Emmanuelle Taugourdeau, 2005. "Dépenses publiques dans une économie à deux pays : Stackelberg versus Nash," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00094965, HAL.
- Richard Cornes, 1993. "Dyke Maintenance and Other Stories: Some Neglected Types of Public Goods," The Quarterly Journal of Economics, Oxford University Press, vol. 108(1), pages 259-271.
- Ellingsen, Tore, 1998. "Externalities vs internalities: a model of political integration," Journal of Public Economics, Elsevier, vol. 68(2), pages 251-268, May.
- repec:adr:anecst:y:2005:i:77:p:11 is not listed on IDEAS
- Gal-Or, Esther, 1985. "First Mover and Second Mover Advantages," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 649-653, October.
- Francis Bloch & Unal Zenginobuz, 2007. "The effect of spillovers on the provision of local public goods," Review of Economic Design, Springer;Society for Economic Design, vol. 11(3), pages 199-216, November.
- Bloch, Francis & Zenginobuz, Unal, 2004. "The Effect of Spillovers on the Provision of Local Public Goods," MPRA Paper 186, University Library of Munich, Germany, revised 05 Oct 2006.
- van Damme, Eric & Hurkens, Sjaak, 1999. "Endogenous Stackelberg Leadership," Games and Economic Behavior, Elsevier, vol. 28(1), pages 105-129, July.
- Eric van Damme & Sjaak Hurkens, 1996. "Endogenous Stackelberg leadership," Economics Working Papers 190, Department of Economics and Business, Universitat Pompeu Fabra.
- van Damme, E.E.C. & Hurkens, J.P.M., 1996. "Endogenous Stackelberg Leadership," Discussion Paper 1996-115, Tilburg University, Center for Economic Research.
- van Damme, E.E.C. & Hurkens, J.P.M., 1999. "Endogenous Stackelberg leadership," Other publications TiSEM 83a05fd8-4285-48f3-84ef-3, Tilburg University, School of Economics and Management.
- Cornes, Richard & Hartley, Roger, 2007. "Weak links, good shots and other public good games: Building on BBV," Journal of Public Economics, Elsevier, vol. 91(9), pages 1684-1707, September.
- Richard Cornes & Roger Hartley, "undated". "Weak Links, Good Shots And Other Public Good Games: Building On Bbv," Discussion Papers 06/09, University of Nottingham, School of Economics.
- Richard Cornes & Roger Hartley, 2006. "Weak Links, Good Shots and other PublicGood Games: Building on BBV," The School of Economics Discussion Paper Series 0624, Economics, The University of Manchester.
- Amir, Rabah & Grilo, Isabel, 1999. "Stackelberg versus Cournot Equilibrium," Games and Economic Behavior, Elsevier, vol. 26(1), pages 1-21, January.
- AMIR, Rabah & GRILO, Isabel, "undated". "Stackelberg versus Cournot equilibrium," CORE Discussion Papers RP 1368, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- 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.
- Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
- Varian, Hal R., 1994. "Sequential contributions to public goods," Journal of Public Economics, Elsevier, vol. 53(2), pages 165-186, February.
- Steve Dowrick, 1986. "von Stackelberg and Cournot Duopoly: Choosing Roles," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 251-260, Summer.
- Toshihiro Ihori, 2000. "Defense Expenditures and Allied Cooperation," Journal of Conflict Resolution, Peace Science Society (International), vol. 44(6), pages 854-867, December.
- Toshihiro Ihori, 2000. "Defense Expenditures and Allied Cooperation," CIRJE F-Series CIRJE-F-68, CIRJE, Faculty of Economics, University of Tokyo.
- Pal, Debashis, 1996. "Endogenous Stackelberg Equilibria with Identical Firms," Games and Economic Behavior, Elsevier, vol. 12(1), pages 81-94, January.
- Jack Hirshleifer, 1983. "From weakest-link to best-shot: The voluntary provision of public goods," Public Choice, Springer, vol. 41(3), pages 371-386, January.
- repec:adr:anecst:y:2005:i:77 is not listed on IDEAS Full references (including those not matched with items on IDEAS)