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Leadership in Public Good Provision: a Timing Game Perspective

Author

Listed:
  • Grégoire Rota-Graziosi

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

  • Hubert Kempf

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract
We address in this paper the issue of leadership when two governments provide public goods to their constituencies with cross-border externalities as both public goods are valued by consumers in both countries. We study a timing game between two different countries: before providing public goods, the two policymakers non-cooperatively decide their preferred sequence of moves. We establish conditions under which a first- or second-mover advantage emerges for each country, highlighting the role of spillovers and the complementarity or substitutability of public goods. As a result, we are able to prove that there is no leader when, for both countries, public goods are substitutable. When public goods are complements for both countries, each of them may emerge as the leader in the game. Hence a coordination issue arises. We use the notion of risk-dominance to select the leading government. Finally, in the mixed case, the government for whom public goods are substitutable becomes the leader.

Suggested Citation

  • Grégoire Rota-Graziosi & Hubert Kempf, 2010. "Leadership in Public Good Provision: a Timing Game Perspective," Post-Print halshs-00517085, HAL.
    • Handle: RePEc:hal:journl:halshs-00517085
    DOI: 10.1111/j.1467-9779.2010.01473.x
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    Cited by:

    1. Gregor, Martin, 2015. "Task divisions in teams with complementary tasks," Journal of Economic Behavior & Organization, Elsevier, vol. 117(C), pages 102-120.
    2. Andreas Haufler & Hayato Kato & Hayato Kato, 2024. "A Global Minimum Tax for Large Firms Only: Implications for Tax Competition," CESifo Working Paper Series 11087, CESifo.
    3. Keisuke Hattori & Takahiro Kitamura, 2013. "Endogenous Timing in Strategic Environmental Policymaking," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 55(2), pages 199-215, June.
    4. Hoffmann, Magnus & Rota-Graziosi, Grégoire, 2012. "Endogenous timing in general rent-seeking and conflict models," Games and Economic Behavior, Elsevier, vol. 75(1), pages 168-184.
    5. Bodhisattva Sengupta, 2016. "Endogenous Leadership in a Federal Transfer Game," Working Papers id:11473, eSocialSciences.
    6. Sengupta, Bodhisatva, 2016. "Endogenous Leadership in a Federal Transfer Game," Working Papers 16/180, National Institute of Public Finance and Policy.
    7. Hubert Kempf & Grégoire Rota Graziosi, 2010. "Leadership in Public Good Provision: A Timing Game Perspective," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(4), pages 763-787, August.
    8. Hubert Kempf & Grégoire Rota-Graziosi, 2015. "Further analysis on leadership in tax competition: the role of capital ownership—a comment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(6), pages 1028-1039, December.
    9. Kempf, Hubert & Rota-Graziosi, Grégoire, 2010. "Endogenizing leadership in tax competition," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 768-776, October.
    10. Jun‐ichi Itaya & Atsue Mizushima & Kengo Kurosaka, 2023. "Endogenous timing and income inequality in the voluntary provision of public goods: Theory and experiment," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(4), pages 1347-1376, November.
    11. Courey, Gabriel & Heywood, John S. & McGinty, Matthew, 2021. "Ownership shares and choosing the best leader," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 482-500.
    12. Grégoire ROTA-GRAZIOSI & Hubert KEMPF, 2009. "Leading and losing the tax competition race," Working Papers 200921, CERDI.
    13. Keisuke Hattori & Mai Yamada, 2018. "Skill Diversity and Leadership in Team Production," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 174(2), pages 351-374, June.
    14. Sharma, Ajay & Pal, Rupayan, 2019. "Nash equilibrium in tax and public investment competition," International Review of Economics & Finance, Elsevier, vol. 62(C), pages 106-120.
    15. Carsten Eckel & Yutao Han & Kate Hynes & Jin Zhang, 2021. "Structural fund, endogenous move and commitment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(2), pages 465-482, April.
    16. Wolfgang Buchholz & Todd Sandler, 2017. "Successful Leadership in Global Public Good Provision: Incorporating Behavioural Approaches," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(3), pages 591-607, July.
    17. Hattori, Keisuke & Yamada, Mai, 2023. "Closing the Psychological Distance: The Effect of Social Interactions on Team Performance," MPRA Paper 117042, University Library of Munich, Germany.
    18. Keisuke Hattori & Mai Yamada, 2020. "Effective Leadership Selection in Complementary Teams," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 176(4), pages 620-639.
    19. Senatore, L, 2011. "Public Good Provision with Convex Costs," MPRA Paper 36984, University Library of Munich, Germany.

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    Keywords

    cerdi;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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