Leadership in Public Good Provision: a Timing Game Perspective

Hubert Kempf (hubert.kempf@ens-paris-saclay.fr) and Grégoire Rota Graziosi

Working papers from Banque de France

Abstract: We address in this paper the issue of leadership when two governments provide public goods to their constituencies with cross border externalities as both public goods are valued by consumers in both countries. We study a timing game between two different countries: before providing public goods, the two policymakers non-cooperatively decide their preferred sequence of moves. We establish conditions under which a first- or second-mover advantage emerges for each country, highlighting the role of spillovers and the complementarity or substitutability of public goods. As a result we are able to prove that there is no leader when, for both countries, public goods are substitutable. When public goods are complements for both countries, each of them may emerge as the leader in the game. Hence a coordination issue arises. We use the notion of risk-dominance to select the leading government. Lastly, in the mixed case, the government for whom public goods are substitutable becomes the leader.

Keywords: Endogenous timing; First/second-mover advantage; Public good; Stackelberg equilibria; Risk dominance. (search for similar items in EconPapers)
JEL-codes: E31 E42 E58 E62 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2009
New Economics Papers: this item is included in nep-cdm, nep-mac, nep-mic, nep-pbe and nep-pol
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Citations: View citations in EconPapers (4)

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https://publications.banque-france.fr/sites/defaul ... g-paper_240_2009.pdf (application/pdf)

Related works:
Working Paper: Leadership in Public Good Provision: a Timing Game Perspective (2011)
Working Paper: Leadership in Public Good Provision: a Timing Game Perspective (2011)
Journal Article: Leadership in Public Good Provision: A Timing Game Perspective (2010)
Working Paper: Leadership in Public Good Provision: a Timing Game Perspective (2010)
Working Paper: Leadership in Public Good Provision: a Timing Game Perspective (2010)
Working Paper: Leadership in Public Good Provision: a Timing Game Perspective (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:240

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