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Bargaining over Public Goods

  • Julio Davila

    ()

    (CORE - Center of Operation Research and Econometrics [Louvain] - Université Catholique de Louvain (UCL) - Belgique, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)

  • Jan Eeckhout

    (Universitat Pompeu Fabra - Universitat Pompeu Fabra, Department of Economics - University College London)

  • C. Martinelli

    (ITAM - Instituto Tecnológico Autónomo de México - ITAM)

In a simple public good economy, we propose a natural bar- gaining procedure, the equilibria of which converge to Lin- dahl allocations as the cost of bargaining vanishes. The pro- cedure splits the decision over the allocation in a decision about personalized prices and a decision about output levels for the public good. Since this procedure does not assume price-taking behavior, it provides a strategic foundation for the personalized taxes inherent in the Lindahl solution to the public goods problem.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00633592.

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Date of creation: 2009
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Publication status: Published, Journal of Public Economic Theory, 2009, 11, 6, 927-945
Handle: RePEc:hal:cesptp:halshs-00633592
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00633592
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  1. Julio Davila & Jan Eeckhout, 2004. "Competitive Bargaining Equilibria," Cahiers de la Maison des Sciences Economiques b04067, Université Panthéon-Sorbonne (Paris 1).
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