Two characterizations of Cost Share Equilibria

Maria Graziano, Marialaura Pesce and Maria Romaniello ()
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Maria Romaniello: Università degli Studi della Campania Luigi Vanvitelli.

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: We consider pure exchange economies with a finite number of private goods and the choice of non-Samuelsonian public goods. For this type of economies, Basile, Graziano, and Pesce (2016) proposed the notion of cost share equilibrium with individual payments for public goods varying according to individual benefits. This situation arises naturally when a level of provision is interpreted as a whole configuration of public policies or when cost share functions are interpreted as voluntary contributions rather than predetermined tax systems (see Mas- Colell (1980)). We establish the equivalence of cost share equilibria with cooperative and noncooperative game-theoretic solutions: 1. we characterize cost share equilibria as those allocations which cannot be improved upon by society; 2. we characterize cost share equilibria as the Nash equilibria of a game with two players. The cooperative solutions analyzed in the paper are defined via a contribution scheme which captures the fraction of the total cost of collective goods that each coalition of agents is expected to cover.

Keywords: Non-Samuelsonian public goods; Cost share equilibrium; Aubin core; Nash equilibrium. (search for similar items in EconPapers)
JEL-codes: C72 D49 D51 (search for similar items in EconPapers)
Date: 2021-11-12, Revised 2023-05-24
New Economics Papers: this item is included in nep-cwa, nep-gth, nep-mic and nep-ore
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