Faias, Marta and Moreno, Emma and Wooders, Myrna (2009): A Strategic market game approach for the private provision of public goods.

PDF
MPRA_paper_37777.pdf Download (257kB)  Preview 
Abstract
Bergstrom, Blume and Varian (1986) provides an elegant gametheoretic model of an economy with one private good and one public good. Strategies of players consist of voluntary contributions of the private good to public good production. Without relying on first order conditions, the authors demonstrate existence of Nash equilibrium and an extension of Warr's neutrality result  any redistribution of endowment that left the set of contributors unchanged would induce a new equilibrium with the same total public good provision. The assumption of oneprivate good greatly facilities the results. We provide analogues of the Bergstrom, Blume and Varian results in a model allowing multiple private and public goods. In addition, we relate the strategic market game equilibrium to the private provision of equilibrium of Villanaci and Zenginobuz (2005), which provides a counterpart to the Walrasian equilibrium for a public goods economy. Our techniques follow those of Dubey and Geanakoplos (2003), which itself grows out of the seminal work of Shapley and Shubik (1977). Our approach also incorporates, into the strategic market game literature, economies with production, not previously treated and, as a byproduct, establishes a new existence of privateprovision equilibrium.
Item Type:  MPRA Paper 

Original Title:  A Strategic market game approach for the private provision of public goods 
English Title:  A Strategic Market Game Approach for the Private Provision of Public Goods 
Language:  English 
Keywords:  Public goods, market games, equilibrium, Nash equilibrium, private provision, voluntary contributions 
Subjects:  D  Microeconomics > D0  General > D02  Institutions: Design, Formation, and Operations H  Public Economics > H4  Publicly Provided Goods > H41  Public Goods D  Microeconomics > D0  General > D01  Microeconomic Behavior: Underlying Principles 
Item ID:  37777 
Depositing User:  Myrna Wooders 
Date Deposited:  31. Mar 2012 22:32 
Last Modified:  19. Feb 2013 13:35 
References:  Allouch, N. (2012) On the private provision of public goods on networks, typescript. Amir, R., . Bloch, F. (2009): Comparative statics in a simple class of strategic market games. Games and Economic Behavior, 65, 724. Amir, R. Sahi, S., Shubik, M, Yao, S. (1990): A strategic market game with complete markets. Journal of Economic Theory, 51, 126143. Andreoni, J. (1988): Privately provided public goods in a large economy: The limits of altruisam. Journal of Public Economics 35, 5773. Andreoni, J. (1990): Impure altruism and donations to public goods: A theory of warmglow giving, The Economic Journal,100, 464477. Bergstrom, T., Blume, L., Varian, H. (1986): On the private provision of public goods. Journal of Public Economics, 29, 2549. Cornes, R., Itaya, J. (2010): On the private provision of two or more public goods. Journal of Public Economic Theory, 12(2), 363385. Dubey, P., Geanakoplos, J. (2003): From Nash to Walras via ShapleyShubik. Journal of Mathematical Economics, 39, 391400. Florenzano, M. (2009): WalrasLindahlWicksell: What equilibrium concept for public goods provision? I  The convex case. CES Working Papers 2009.09. Documents de Travail du Centre d'Economie de la Sorbonne. Giraud, G. (2003): Strategic market games: an introduction. Journal of Mathematical Economics 39, 355375 Foley, D. (1970): Lindahl's solution and the core of an economy with public goods. Econometrica, 38, 6672. Itaya, J., de Meza, D., Myles, G. (2002): Income distribution, taxation, and the private provision of public goods. Journal of Public Economic Theory, 4(3), 27397. Kemp, M. C. (1984): A note of the theory of international transfers. Economics Letters, 14, 259262. Koutsougeras, L C. (2003a): NonWalrasian equilibria and the Law of One Price. Journal of Economic Theory, 108(1), 169175. Koutsougeras, L. C. (2003b): Convergence to No arbitrage Equilibria in Market Games." Journal of Mathematical Economics, 39, 401420. Muench, T.J. (1972): The Core and the Lindahl Equilibrium of an economy with a public good: An example. Journal of Economic Theory, 4, 241255. Peck, K., Shell, J., Spear, S.E. (1992): The Market Game: Existence and structure of equilibrium. Journal of Mathematical Economics, 21, 271299. Samuelson, P.A., (1954): The pure theory of public expenditure. The Review of Economics and Statistics, 36, 387389. Shapley, L.S., Shubik, M., (1977): Trade using one commodity as a means of payment. Journal of Political Economy, 85, 937968. Silvestre, J. (2012) All but one free ride when wealth effects are small. SERIEs, 3, 201207. Villanaci, A., Zenginobuz, E.U. (2005): Existence and regularity of equilibria in a general equilibrium model with private provision of a public good. Journal of Mathematical Economics, 41, 617636. Villanacci, A., Ü. Zenginobuz (2007), "On the neutrality of redistribution in a general equilibrium model with public goods. Journal of Public Economic Theory, 9 (2), 183200. Villanacci, A., Ü. Zenginobuz (20012),"Subscription equilibrium with production: Nonneutrality and constrained suboptimality." Journal of Economic Theory 147, 407425 Warr, P.G. (1983): The private provision of a public good Is independent of the distribution of income. Economics Letters, 13, 207211. 
URI:  http://mpra.ub.unimuenchen.de/id/eprint/37777 