A competitive equilibrium for a warm-glow economy

Nizar Allouch

Economic Theory, 2013, vol. 53, issue 1, 269-282

Abstract: The warm-glow model (Andreoni in J Political Econ 97:1447–1458, 1989 ; Econ J 100:464–477, 1990 ) of public goods provision has received widespread interest, yet surprisingly most attention has focused on the voluntary contribution equilibrium of the model, and only very little attention has been devoted to the competitive equilibrium. In this paper, we introduce the concept of competitive equilibrium for a warm-glow economy (henceforth, warm-glow equilibrium) and establish both existence and welfare properties. The warm-glow equilibrium concept may prove to be very useful to the normative and positive theory of public goods provision. First, it is a price-based mechanism achieving efficient outcomes. Second, not only could the warm-glow equilibria outcomes serve as a point of reference to measure free-riding and welfare loss but also, as suggested by Bernheim and Rangel (Behavioral Economics and Its Applications, 2007 ), in large economies they may be approximated by Walrasian equilibria outcomes. Copyright Springer-Verlag 2013

Keywords: Warm-glow; Public goods provision; Competitive equilibrium; Lindahl equilibrium; Asymptotic provision; H4; D6 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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Working Paper: A Competitive Equilibrium for a Warm Glow Economy (2009)
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DOI: 10.1007/s00199-012-0689-z

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