IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v12y1984i1p97-116.html
   My bibliography  Save this article

Public Good Producers and Spillovers : An Analysis of Duopoly Behavior

Author

Listed:
  • Scott McKinney

    (Hobart and William Smith Colleges)

Abstract

This article presents an analysis of the output and welfare effects of different patterns of behavior when two public good-producing communities interact through benefit spillovers. This analysis differsfrom earlier work in ascribing to these communities (1) more complex assumptions concerning the behavior of neighboring communities and (2) a longer time horizon in the welfare- maximizing decision. We develop two models of independent community behavior and, as a benchmark, a model of the behavior of a consolidated jurisdiction which internalizes the benefit spillovers. Simulations using these models suggest that (1) the importance of welfare losses resulting from strategic behavior relative to those resultingfrom uninternalized spillovers vary directly with the extent of spillovers, indirectly with intercommunity differences; (2) more sophisticated behavior results in short-term welfare gains but losses in equilibrium; and, (3) it is efficient for communities with greater resources or greater degrees of spillover to bear a disproportionate burden of public good provision, and welfare is better redistributed through resource transfers than through a reallocation of public good provision.

Suggested Citation

  • Scott McKinney, 1984. "Public Good Producers and Spillovers : An Analysis of Duopoly Behavior," Public Finance Review, , vol. 12(1), pages 97-116, January.
    • Handle: RePEc:sae:pubfin:v:12:y:1984:i:1:p:97-116
    DOI: 10.1177/109114218401200105
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/109114218401200105
    Download Restriction: no
    File URL: https://libkey.io/10.1177/109114218401200105?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. F. T. Dolbear & L. B. Lave & G. Bowman & A. Lieberman & E. Prescott & F. Rueter & R. Sherman, 1968. "Collusion in Oligopoly: An Experiment on the Effect of Numbers and Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 82(2), pages 240-259.
    2. J. W. Friedman, 1968. "Reaction Functions and the Theory of Duopoly," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 35(3), pages 257-272.
    3. Albert Breton, 1970. "Public Goods And The Stability Of Federalism," Kyklos, Wiley Blackwell, vol. 23(4), pages 882-902, November.
    4. Cyert, Richard M & DeGroot, Morris H, 1973. "An Analysis of Cooperation and Learning in a Duopoly Context," American Economic Review, American Economic Association, vol. 63(1), pages 24-37, March.
    5. Alan Williams, 1966. "The Optimal Provision of Public Goods in a System of Local Government," Journal of Political Economy, University of Chicago Press, vol. 74(1), pages 18-33.
    6. repec:bla:kyklos:v:22:y:1969:i:4:p:641-60 is not listed on IDEAS
    7. Herbert Kiesling, 1976. "A Model For Analyzing The Effects Of Governmental Consolidation In The Presence Of Public Goods," Kyklos, Wiley Blackwell, vol. 29(2), pages 233-255, January.
    8. Kuenne, Robert E, 1980. "Duopoly Reaction Functions under Crippled Optimization Regimes," Oxford Economic Papers, Oxford University Press, vol. 32(2), pages 224-240, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. HUANG Weihong, 2009. "Price-taking Strategy Versus Dynamic Programming in Oligopoly," Economic Growth Centre Working Paper Series 0904, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    2. Kyung Hwan Baik & Subhasish M. Chowdhury & Abhijit Ramalingam, 2021. "Group size and matching protocol in contests," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(4), pages 1716-1736, November.
    3. Conrad, Klaus & Seitz, Helmut, 1997. "Infrastructure provision and international market share rivalry," Regional Science and Urban Economics, Elsevier, vol. 27(6), pages 715-734, November.
    4. Agnar Sandmo, 2003. "Environmental Taxation and Revenue for Development," WIDER Working Paper Series DP2003-86, World Institute for Development Economic Research (UNU-WIDER).
    5. Hikaru Ogawa, 2010. "Fiscal Competition among Regional Governments - Tax Competition, Expenditure Competition and Externalities -," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 6(1), pages 1-30, February.
    6. Marc Escrihuela-Villar & Carlos Gutiérrez-Hita, 2018. "A note on the privatization neutrality result with colluding private firms," Economics Bulletin, AccessEcon, vol. 38(4), pages 2016-2025.
    7. Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2000. "Does information about competitors' actions increase or decrease competition in experimental oligopoly markets?," International Journal of Industrial Organization, Elsevier, vol. 18(1), pages 39-57, January.
    8. Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2004. "Two are few and four are many: number effects in experimental oligopolies," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 435-446, April.
    9. Rogers Ahlbrandt, 1973. "Efficiency in the provision of fire services," Public Choice, Springer, vol. 16(1), pages 1-15, September.
    10. Barr, Jason & Saraceno, Francesco, 2009. "Organization, learning and cooperation," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 39-53, May.
    11. Simon P Anderson & Jacob K Goeree & Charles A Holt, 2001. "A Thoeretical Anlysis of Altruism and Decision Error in Public Goods Games," Levine's Working Paper Archive 563824000000000075, David K. Levine.
    12. Paul S. Kochanowski & Saul Pleeter, 1977. "Compensation With Induced Factor Movements in a Simple General Equilibrium Model," Public Finance Review, , vol. 5(1), pages 23-39, January.
    13. Moshe Justman & Jacques-Francois Thisse, 2000. "Local Public Funding of Higher Education When Skilled Labor is Imperfectly Mobile," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(3), pages 247-258, May.
    14. Randrianarisoa, Laingo M. & Zhang, Anming, 2019. "Adaptation to climate change effects and competition between ports: Invest now or later?," Transportation Research Part B: Methodological, Elsevier, vol. 123(C), pages 279-322.
    15. Cremer, Helmuth & Marchand, Maurice & Pestieau, Pierre, 1997. "Investment in local public services: Nash equilibrium and social optimum," Journal of Public Economics, Elsevier, vol. 65(1), pages 23-35, July.
    16. repec:hal:spmain:info:hdl:2441/6782 is not listed on IDEAS
    17. Fanti, Luciano & Gori, Luca & Sodini, Mauro, 2012. "Nonlinear dynamics in a Cournot duopoly with relative profit delegation," Chaos, Solitons & Fractals, Elsevier, vol. 45(12), pages 1469-1478.
    18. Bodhisattva Sengupta, 2023. "Regional policy interaction in a federal economy," Indian Economic Review, Springer, vol. 58(1), pages 91-103, June.
    19. Garland Hadley, 1985. "Interstate migration, income and public school expenditures: An update of an experiment," Public Choice, Springer, vol. 46(2), pages 207-214, January.
    20. Kurono, Ruka, 2022. "What drives the regional disparities in municipal national health insurance premiums?," Japan and the World Economy, Elsevier, vol. 61(C).
    21. Miguel A. Fonseca & Yan Li & Hans‐Theo Normann, 2018. "Why factors facilitating collusion may not predict cartel occurrence — experimental evidence," Southern Economic Journal, John Wiley & Sons, vol. 85(1), pages 255-275, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:12:y:1984:i:1:p:97-116. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.