Contributing or Free-Riding? Voluntary Participation in a Public Good Economy
We consider a (pure) public goods provision problem with voluntary participation in a quasi-linear economy. We propose a new hybrid solution concept, the free-riding-proof core (FRP-Core), which endogenously determines a contribution group, public good provision level, and its cost-sharing. The FRP-Core is always nonempty in public good economies but does not usually achieve global efficiency. The FRP-Core has support from both cooperative and noncooperative games. In particular, it is equivalent to the set of perfectly coalition-proof Nash equilibrium (Bernheim, Peleg, and Whinston, 1987) of a dynamic game with players' participation decisions followed by a common agency game of public goods provision. We illustrate various properties of the FRPCore with an example. We also show that the equilibrium level of public good shrinks to zero as the economy is replicated.
|Date of creation:||Mar 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.ier.hit-u.ac.jp/Email:
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.:
- Conley John P., 1994. "Convergence Theorems on the Core of a Public Goods Economy: Sufficient Conditions," Journal of Economic Theory, Elsevier, vol. 62(1), pages 161-185, February.
- 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.
- Debraj Ray & Rajiv Vohra, 2001. "Coalitional Power and Public Goods," Journal of Political Economy, University of Chicago Press, vol. 109(6), pages 1355-1384, December.
- Paul Healy, 2010.
"Equilibrium participation in public goods allocations,"
Review of Economic Design,
Springer, vol. 14(1), pages 27-50, March.
- Paul Healy, 2005. "Equilibrium Participation in Public Goods Allocations," GSIA Working Papers 2006-E7, Carnegie Mellon University, Tepper School of Business.
- Konishi, Hideo & Le Breton, Michel & Weber, Shlomo, 1999.
"On Coalition-Proof Nash Equilibria in Common Agency Games,"
Journal of Economic Theory,
Elsevier, vol. 85(1), pages 122-139, March.
- KONISHI, Hideo & LE BRETON, Michel & WEBER, Shlomo, . "On coalition-proof Nash equilibria in common agency games," CORE Discussion Papers RP -1383, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Laussel, Didier & Le Breton, Michel, 2001.
"Conflict and Cooperation: The Structure of Equilibrium Payoffs in Common Agency,"
Journal of Economic Theory,
Elsevier, vol. 100(1), pages 93-128, September.
- LAUSSEL, Didier & LE BRETON, Michel, . "Conflict and cooperation. The structure of equilibrium payoffs in common agency," CORE Discussion Papers RP -1519, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Theodore Groves & John Ledyard, 1976.
"Optimal Allocation of Public Goods: A Solution to the 'Free Rider Problem',"
144, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Groves, Theodore & Ledyard, John O, 1977. "Optimal Allocation of Public Goods: A Solution to the "Free Rider" Problem," Econometrica, Econometric Society, vol. 45(4), pages 783-809, May.
- Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
- Ray, Debraj, 2007. "A Game-Theoretic Perspective on Coalition Formation," OUP Catalogue, Oxford University Press, number 9780199207954.
- Palfrey, Thomas R. & Rosenthal, Howard, 1984. "Participation and the provision of discrete public goods: a strategic analysis," Journal of Public Economics, Elsevier, vol. 24(2), pages 171-193, July.
- Devashish Mitra, 1999. "Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination," American Economic Review, American Economic Association, vol. 89(5), pages 1116-1134, December.
- Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, vol. 49(1), pages 65-71, January.
- Laussel, Didier & Le Breton, Michel, 1998. "Efficient Private Production of Public Goods under Common Agency," Games and Economic Behavior, Elsevier, vol. 25(2), pages 194-218, November.
- Hurwicz, L, 1979. "Outcome Functions Yielding Walrasian and Lindahl Allocations at Nash Equilibrium Points," Review of Economic Studies, Wiley Blackwell, vol. 46(2), pages 217-25, April.
- Saijo, Tatsuyoshi & Yamato, Takehiko, 1999. "A Voluntary Participation Game with a Non-excludable Public Good," Journal of Economic Theory, Elsevier, vol. 84(2), pages 227-242, February.
- Le Breton, Michel & Salanie, Francois, 2003. "Lobbying under political uncertainty," Journal of Public Economics, Elsevier, vol. 87(12), pages 2589-2610, December.
- Bombardini, Matilde, 2008. "Firm heterogeneity and lobby participation," Journal of International Economics, Elsevier, vol. 75(2), pages 329-348, July.
- Maruta, Toshimasa & Okada, Akira, 2005. "Group Formation and Heterogeneity in Collective Action Games," Discussion Papers 2005-07, Graduate School of Economics, Hitotsubashi University.
- Milleron, Jean-Claude, 1972. "Theory of value with public goods: A survey article," Journal of Economic Theory, Elsevier, vol. 5(3), pages 419-477, December.
When requesting a correction, please mention this item's handle: RePEc:hst:ghsdps:gd09-128. 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: (Tatsuji Makino)
If references are entirely missing, you can add them using this form.