The private provision of public good in the case of satiation points: The case of a quasi-linear economy
We consider a quasi-linear economy with satiation points for the public good which can be different from an individual to another. We prove that if the range of the support of the distribution of satiation points is greater than the average of satiation points, there always exist wealth distributions for which the associated Nash equilibrium of voluntary contributions gives an overproduction of the public good relatively to the Pareto optimal quantity. Surprisingly we prove under weak assumptions that the probability of an oversupply is strictly positive but remains smaller that the probability of an undersupply. This result holds for all distributions of satiation points such that the median is smaller or equal to the arithmetic mean and for any distributions of initial wealth. FUrthermore, if the distribution of satiation points is a truncated normal or lognormal distribution we obtain the following result: the probability of an overproduction of the Nash quantity respectively to the Pareto optimal quantity is all the stronger since the satiation quantities of the public good are small relative to the resources of the economy. A stochastic dominance argument is used in the proof.
|Date of creation:||01 Jun 1992|
|Date of revision:|
|Contact details of provider:|| Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)|
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:cor:louvco:1992034. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alain GILLIS)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.