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Voluntary Provision of a Public Good in a Strategic Market Game

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  • Somdeb Lahiri

Abstract

The purpose of this paper is to investigate the mutual compatibility of voluntary provision of public good and strategic behavior of consumers in the market for private goods. We study the existence of equilibrium private provision of a public good within general strategic equilibrium framework with a finite number of players. The mechanism for the provision of public good follows the one due to Bergstrom, Blume and Varian (1986) and the trading mechanism for private goods follows the strategic market game with wash sales due to Dubey and Shubik (1986). The new result of the paper is the demonstration of existence of an equilibrium point in pure strategies for finite number of players. Due to the existence of trivial equilibria at which all markets are closed, equilibrium points are constructed as limits of sequences of ?- equilibria of perturbed games. JEL Classification: C72, D43, H41.

Suggested Citation

  • Somdeb Lahiri, 2013. "Voluntary Provision of a Public Good in a Strategic Market Game," Recherches économiques de Louvain, De Boeck Université, vol. 79(4), pages 45-73.
    • Handle: RePEc:cai:reldbu:rel_794_0045
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    Keywords

    strategic market game; public good; equilibrium points;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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