Further Analysis on Public-Good Provision in a Repeated-Game Setting

Keisuke Kawachi and Hikaru Ogawa

FinanzArchiv: Public Finance Analysis, 2006, vol. 62, issue 3, 339-352

Abstract: In a model of privately provided public goods within a repeated-game setting, Pecorino (1999) shows that it is not only possible to maintain cooperation, but it is "easy" in a large economy. Models of privately provided public goods are closely related to interregional tax competition models with spillovers in public-good provision. This paper reexamines the argument of Pecorino in an infinitely repeated interaction model of interregional tax competition. The results show that in a large economy, while the trigger strategy supports the efficient tax rate if there exists substantial spillover of public goods, it fails to do so if there are few benefit spillovers.

Keywords: voluntary provision; tax competition; spillovers; group size; repeated game (search for similar items in EconPapers)
JEL-codes: F21 H21 H71 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (10)

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DOI: 10.1628/001522106X153400

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