Book contents
- Frontmatter
- Contents
- List of tables and figures
- Preface
- Part I Introduction to the theory of externalities, public goods, and club goods
- Part II Externalities
- Part III Public goods
- 6 Pure public goods: Nash-Cournot equilibria and Pareto optimality
- 7 Alternative mechanisms for provision of public goods
- 8 Public goods in general
- 9 Game theory and public goods
- 10 Departures from Nash-Cournot behavior
- Part IV Clubs and club goods
- Part V Applications and future directions
- References
- Author index
- Subject index
10 - Departures from Nash-Cournot behavior
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- List of tables and figures
- Preface
- Part I Introduction to the theory of externalities, public goods, and club goods
- Part II Externalities
- Part III Public goods
- 6 Pure public goods: Nash-Cournot equilibria and Pareto optimality
- 7 Alternative mechanisms for provision of public goods
- 8 Public goods in general
- 9 Game theory and public goods
- 10 Departures from Nash-Cournot behavior
- Part IV Clubs and club goods
- Part V Applications and future directions
- References
- Author index
- Subject index
Summary
In the noncooperative subscription model of pure public good provision in Chapter 6, we showed that if the strategies are defined in terms of the quantities chosen by the various individuals, the resulting Nash equilibrium behavior generally implies a Pareto-suboptimal outcome. In Chapter 9, we referred to Johansen's argument that in a game of complete information played once, the Nash equilibrium strategies have a strong claim to be reflecting rational behavior. Those attempts to find mechanisms with superior outcomes that we examined in Chapter 7 typically have relied on some exogenously imposed, supposedly benevolent enforcement agency, such as a government, that tells the players the rules of the game and ensures compliance. These observations leave a number of questions unanswered. Are there plausible mechanisms other than the subscription process that, like it, do not involve the degree of communication and cooperation assumed in discussions of cooperative games and the core? If so, how do their equilibrium outcomes compare with those of the subscription model? In particular, do their equilibrium outcomes imply a higher or a lower level of provision than is implied by the subscription model?
We should emphasize at the outset that the quantitative significance of easy riding and its welfare implications is an empirical matter. Indeed, even the Nash equilibrium of the pure public good subscription model can, under certain circumstances, lie on the locus of Pareto-efficient allocations. Figure 10.1 shows such an extreme situation, which is associated with kinked indifference curves in (y, Q) space.
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- Information
- The Theory of Externalities, Public Goods, and Club Goods , pp. 327 - 344Publisher: Cambridge University PressPrint publication year: 1996