On the Frequency of Interior Cournot-Nash Equilibria in a Public Good Economy

16 Pages Posted: 21 Aug 2003

See all articles by Wolfgang Buchholz

Wolfgang Buchholz

Universitaet Regensburg; CESifo (Center for Economic Studies and Ifo Institute)

Richard C. Cornes

Australian National University (ANU) - Faculty of Economics & Commerce; CESifo (Center for Economic Studies and Ifo Institute)

Wolfgang Peters

European University Frankfurt

Date Written: July 2003

Abstract

In a public-good economy the distribution of initial income is an important determinant of how many individuals contribute to the public good. For the case when all individuals have identical preferences, a simple formula is derived in this paper which describes the proportion of all income distributions for which an interior Cournot-Nash equilibrium will result in which every agent makes a strictly positive contribution to the public good. This formula is then applied to a standard Cobb-Douglas utility function, showing that the likelihood of interior Cournot-Nash equilibria falls dramatically when the number of individuals is increased. Finally, the implications this result might have for the significance of Shibata-Warr neutrality are discussed.

Keywords: Private Provision of Public Goods, Cournot-Nash Equilibria, Shibata-Warr Neutrality

JEL Classification: D3, H4

Suggested Citation

Buchholz, Wolfgang and Cornes, Richard C. and Peters, Wolfgang, On the Frequency of Interior Cournot-Nash Equilibria in a Public Good Economy (July 2003). CESifo Working Paper Series No. 982. Available at SSRN: https://ssrn.com/abstract=429943

Wolfgang Buchholz (Contact Author)

Universitaet Regensburg ( email )

D-93040 Regensburg, 93053
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Richard C. Cornes

Australian National University (ANU) - Faculty of Economics & Commerce ( email )

Canberra, Australian Capital Territory 2601
Australia

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Wolfgang Peters

European University Frankfurt ( email )

Grosse Scharrnstr. 59
Frankfurt (Oder), Brandenburg 15230
Germany

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