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Interior matching equilibria in a public good economy: An aggregative game approach

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  • Buchholz, Wolfgang
  • Cornes, Richard
  • Rübbelke, Dirk

Abstract

If the equilibrium generated by a matching mechanism is to be the desired Pareto optimal outcome, it is necessary for every player to be at an interior solution at that equilibrium. Using the aggregative game approach developed by Cornes and Hartley (2003, 2007), this paper analyzes the conditions under which matching mechanisms in a public good economy lead to interior matching equilibria at which all agents make strictly positive flat contributions to the public good. In particular, we show that the distribution of income among the agents is crucial for both the existence of interior matching equilibria and Warr neutrality in the case of matching.

Suggested Citation

  • Buchholz, Wolfgang & Cornes, Richard & Rübbelke, Dirk, 2011. "Interior matching equilibria in a public good economy: An aggregative game approach," Journal of Public Economics, Elsevier, vol. 95(7), pages 639-645.
    • Handle: RePEc:eee:pubeco:v:95:y:2011:i:7:p:639-645
    DOI: 10.1016/j.jpubeco.2010.12.010
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    More about this item

    Keywords

    Aggregative games; Matching mechanisms; Public goods; Warr neutrality;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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