Bargaining over public goods
In a simple public good economy, we propose a natural bargaining procedure whose equilibria converge to Lindahl allocations as the cost of bargaining vanishes. The procedure 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 to the Lindahl solution to the public goods problem.
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- DAVILA, Julio & EECKHOUT, Jan, .
"Competitive bargaining equilibrium,"
CORE Discussion Papers RP
2069, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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- Theodore Groves & John Ledyard, 1976.
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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.
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