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T-Space at The University of Toronto Libraries >
Theoretical Economics >
Volume 6, Number 2 (May 2011) >

Please use this identifier to cite or link to this item: http://hdl.handle.net/1807/27182

Title: Contributing or free-riding? Voluntary participation in a public good economy
Authors: Taiji Furusawa; Department of Economics, Hitotsubashi University
Hideo Konishi; Department of Economics, Boston College
Keywords: Endogenous coalition formation, externalities, public good, perfectly coalition-proof Nash equilibrium, free riders, free-riding-proof core, lobbying, common agency game
H41, C71, C72, D61, D72
Issue Date: 3-May-2011
Publisher: Theoretical Economics
Citation: Theoretical Economics; Vol 6, No 2 (2011)
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/] We consider a (pure) public goods provision problem with voluntary participation in a quasi-linear economy. We propose a new hybrid solution concept, the free-riding-proof core (FRP-Core), which endogenously determines a contribution group, public goods provision level, and how to share the provision costs. The FRP-Core is always nonempty in public goods economies but does not usually achieve global efficiency. The FRP-Core has support from both cooperative and noncooperative games. In particular, it is equivalent to the set of perfectly coalition-proof Nash equilibria (Bernheim, Peleg, and Whinston, 1987) of a dynamic game with players' participation decisions followed by a common agency game of public goods provision. We illustrate various properties of the FRP-Core with an example. We also show that the equilibrium level of public goods shrinks to zero as the economy is replicated.
URI: http://hdl.handle.net/1807/27182
Other Identifiers: http://econtheory.org/ojs/index.php/te/article/view/20110219
Rights: Authors who publish in <i>Theoretical Economics</i> will release their articles under the <a href="http://creativecommons.org/licenses/by-nc/2.5/">Creative Commons Attribution-NonCommercial license</a>. This license allows anyone to copy and distribute the article for non-commercial purposes provided that appropriate attribution is given.
Appears in Collections:Volume 6, Number 2 (May 2011)

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