Households, Markets and Public Choice

31 Pages Posted: 17 Sep 2014

See all articles by Hans Gersbach

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Research; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Hans H. Haller

Virginia Tech - Department of Economics

Date Written: August 25, 2014

Abstract

We develop a model that combines competitive exchange of private commodities across endogenously formed groups with public good provision and global collective decisions. There is a tension between local and global collective decisions. In particular, we show that group formation and collective decisions on public goods may destabilize each other, even if there exist favorable conditions for matching on the one hand, and for global collective decisions on the other hand. We establish sufficient conditions for the existence of competitive equilibria with endogenous household formation and public choice.

Keywords: household formation, matching, general equilibrium, public goods, public choice, median voter theorem

JEL Classification: D10, D51, D62, D70, H20, H41

Suggested Citation

Gersbach, Hans and Haller, Hans H., Households, Markets and Public Choice (August 25, 2014). CESifo Working Paper Series No. 4947, Available at SSRN: https://ssrn.com/abstract=2496909 or http://dx.doi.org/10.2139/ssrn.2496909

Hans Gersbach (Contact Author)

ETH Zurich - CER-ETH -Center of Economic Research ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Centre for Economic Policy Research (CEPR)

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Hans H. Haller

Virginia Tech - Department of Economics ( email )

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United States
540-231-7591 (Phone)
540-231-5097 (Fax)

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