Equilibrium Contributions and “Locally Enjoyed” Public Goods

Luca Corazzini ()
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Luca Corazzini: Department of Economics, University of Milan-Bicocca

No 84, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: The main results of the traditional theory of private provision of public goods in the case of identical individuals are: 1) there exists a unique Nash equilibrium pattern of contributions in which everybody contributes the same amount (Bergstrom et al. [1986]); 2) this pattern is locally stable (Cornes [1980]). Under homothetic preferences, I show that these results generally no longer hold in the context of “locally enjoyed” public goods. In particular, when the symmetric Nash equilibrium is not the unique equilibrium pattern, it is locally unstable and there exists at least a locally stable asymmetric Nash equilibrium.

Keywords: Local Interaction; Public Goods; Nash Equilibria (search for similar items in EconPapers)
JEL-codes: C62 C72 H41 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2004-11, Revised 2004-11
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