Trading equilibrium in a public good economy with smooth preferences and a mixed measure space of consumers

Hovav Perets, Benyamin Shitovitz, Menahem Spiegel

Research output: Contribution to journalArticlepeer-review

Abstract

Lindahl and Nash equilibria are often used in the theory of public good. Shitovitz and Spiegel (1998) present an example of 2-person economy with one private good and one pure public good, where the core efficient Lindahl allocation does not Pareto dominate the (inefficient) Nash allocation. In this paper we introduce the new concept of Trading equilibrium for a general public good economy with smooth preferences and a mixed measure space of consumers. We obtain that this economy admits a unique Trading equilibrium. Moreover, the Trading equilibrium induces a core allocation that strictly Pareto dominates the Nash allocation.

Original languageEnglish
Pages (from-to)163-169
Number of pages7
JournalJournal of Mathematical Economics
Volume48
Issue number3
DOIs
StatePublished - May 2012

Keywords

  • Mixed measure space of consumers
  • Nash equilibrium
  • Private provision of public good
  • Public good

ASJC Scopus subject areas

  • Economics and Econometrics
  • Applied Mathematics

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