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Conflict of interest and coordination in public good provision

Nicola Acocella and Giovanni Di Bartolomeo ()

Politica economica, 2010, issue 3, 389-408

Abstract: By applying the new theory of economic policy to the provision of public goods, new and interesting issues emerge. On the one hand, such well-known results as, e.g., the inefficiency of decentralized equilibria can be reinterpreted in the light of the new approach; on the other hand, new issues of coordination arise. A conflict of interest among the agents may in fact not only imply inefficiencies, but also prevent the existence of a Nash equilibrium; moreover, even in situation where there is no conflict, coordination failures may emerge implying multiple equilibria. Finally, the new theory of economic policy can easily be applied in order to extend the concept of a public good to macroeconomic targets pursued simultaneously by more than one player.

Keywords: public goods; new theory of economic policy; satiation; Nash equilibrium; multiple equilibria (search for similar items in EconPapers)
Date: 2010
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