Journal of Dynamics and Games (JDG)

A strategic market game approach for the private provision of public goods

Pages: 283 - 298, Volume 1, Issue 2, April 2014      doi:10.3934/jdg.2014.1.283

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Marta Faias - Departamento de Matemática, FCT, Universidade Nova de Lisboa, Centro de Matemática e Aplicaçōes (CMA), FCT, UNL, Campus da Caparica, 2829-516 Caparica, Portugal (email)
Emma Moreno-García - Facultad de Economía y Empresa, Universidad de Salamanca, Campus Miguel de Unamuno, 37007 Salamanca, Spain (email)
Myrna Wooders - Department of Economics, Vanderbilt University, Nashville, TN 37235, United States (email)

Abstract: Bergstrom, Blume and Varian [4] provides an elegant game-theoretic 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, as in prior literature, the authors demonstrate existence of Nash equilibrium. The assumption of one-private good greatly facilities the results. We provide an analogue of the Bergstrom, Blume and Varian result in a model allowing multiple private and public goods. In addition, we relate the strategic market game equilibrium to the private-provision equilibrium of Villanacci and Zenginobuz [17], which provides a counter-part to the Walrasian equilibrium for a public goods economy. To obtain our results we introduce a model of a strategic market game with public goods. Our approach also incorporates, into the strategic market game literature, economies with production.

Keywords:  Public goods, market games, equilibrium, Nash equilibrium, private provision, voluntary contributions.
Mathematics Subject Classification:  91B50, 91B18, 91A40.

Received: June 2013;      Revised: November 2013;      Available Online: March 2014.