When scientists choose research projects with the highest expected value an externality can appear; slight variations on existing work will be selected in preference to new lines of research that would ultimately generate more value. New research enjoys two advantages: it is riskier and hence more likely to lead to high-value follow-up projects and it can generate more follow-up projects. Less ...

We study the effect of cultural differences on contributions in a public good experiment, analysing real-time interactions between Italian and British subjects in their home countries. In the first treatment, subjects play in nationally-homogeneous groups. In the second treatment, Italian and British subjects play in heterogeneous groups, knowing the nationality of the group members. In the thi...

This paper discusses the economic merits of direct or indirect governmental support for open source projects. Software markets differ from standard textbook markets in three important respects that may give rise to market failures: (i) large economies of scale, (ii) crucially important innovations, (iii) significant network effects and switching costs. We analyze the differences between proprie...

This paper studies how the level of the public good and the amounts of taxes are determined in a bargaining model. Using the Nash bargaining solution as the solution concept, the paper shows that the nature of individuals’ preferences over the public good and private good determines the nature of the tax regime. In particular, the paper characterizes conditions on preferences under which the Na...

We study the Markov equilibria of a model of free riding in which n infinitely lived agents choose between private consumption and irreversible contributions to a durable public good. We show that the set of equilibrium steady states converges to a unique point as depreciation converges to zero. For any level of depreciation, moreover, the highest steady state converges to the efficient level a...

In this paper, we present a new neutrality theorem in the theory of private provision of public good. Our new theorem is qualitative or global in the sense that it does not depend on the original equilibrium allocation. The theorem will reveal that the equilibrium obtained under a proper income redistribution can be made more efficient in the strict Pareto’s sense than the original allocation. ...

This paper suggests that the institutional basis necessary to support efficient intemational trade is provided not only by treaties among national governments but also by international coalitions of private agents. International commercial arbitration is an important example of these private coalitions. The paper reviews the provisions and the practice of international arbitration, and presents...

This paper examines a twofold problem: ...rst, transboundary pollution calls for negotiations among neighboring countries. Second, each country consists of a clean and a polluting region, while bene...ts from abatement activities occur in either region. In turn, the tasks of an internal cost sharing and external negotiations have to be appointed to either the federal or the regional level. The ...

A public good is produced if and only if a volunteer provides it. There are many pure-strategy Nash equilibria in each of which a single player volunteers. Noisy strategy revisions (for instance, quantal responses) allow play to evolve. Equilibrium selection is achieved via the characterisation of long-run play as revisions approximate best replies. The volunteer need not be the lowest-cost pla...

In this paper, we show that a concept of aggregation can hold in network games. Breaking up large networks into smaller pieces, which can be replaced by representative players, leads to a coarse-grained description of strategic interactions. This method of summarizing complex strategic interactions by simple ones can be applied to compute Nash equilibria. We also provide an application to publi...