A note on Lindahl equilibria and incentive comparatibility

Luis Corchon

No 88-03, Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales from Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales

Abstract: We show that if there are Constant Returns to Scale in the production of the public good a) Any Lindahl equilibrium (L.E) is a Nash equilibrium (N.E.) in a price-setting game, b) not all N.E. are L.E., but just those for which the production of the public good is positive and c) the set of L.E. and Strong Equilibria coincide. However if the supply function is continuously differentiable, L.E. is never a N.E. We end the paper with some general comments about the nature of the incentive problem.

Keywords: Lindahl equilibria; Nash equilibrium. (search for similar items in EconPapers)
Pages: 16 pages
Date: 1988
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