Competitive equilibrium with local public goods

Local Public Goods and Clubs1

EQUILIBRIUM IN A SYSTEM OF COMMUNITIES WITH LOCAL PUBLIC GOODS A Diagrammatic Exposition

In a seminal paper, Tiebout (1956) argued that pessimism about the ability of a decentralized economy to achieve an efficient allocation of resources to public good production may be unjustified. He conjectured that individuals have an incentive to segregate into homogeneous communities where public goods can be provided efficiently. Analytical treatment of Tiebout’s hypothesis has appeared onl...

Equilibrium Participation in Public Goods Allocations

We consider a notion of voluntary participation for mechanism design in public goods economies in which mechanisms select public goods allocations and individuals then choose whether or not to submit their requested transfer to the central planner. The set of allocations that are robust to non-participation is shown to be sub-optimal in a wide variety of environments and may shrink to the endow...

Stability of Jurisdiction Structures in Economies with Local Public Goods*

Individuals of different types can form groups, i.e. jurisdictions, for the purposes of collective consumption and production of local public goods by the members of the jurisdictions. Also, the utility of an individual may be affected by the composition and size of the jurisdiction of which he is a member. Jurisdiction formation is endogenous. Trade of private goods can occur within jurisdicti...

Coalition formation with local public goods and group-size effect

Many public goods that are provided by coalitions have a group-size e¤ect. Namely, people prefer to consume a public good in a larger coalition. This paper studies local public goods games with anonymous and separable group-size e¤ect. The core is nonempty when coalition feasible sets are monotonic and players’preferences over public goods satisfy a condition called cardinal connectedness. More...