TY - JOUR
T1 - A graphic representation of the Nash and Lindahl equilibria in an economy with a public good
AU - Danziger, Leif
N1 - Funding Information:
*The author is a graduate student in the Department of Economics, Yale University, grants from Copenhagen University and the Social Science Research Council, Denmark.
PY - 1976/1/1
Y1 - 1976/1/1
N2 - In an economy with a public good the noncooperative Nash equilibrium and the cooperative Lindahl equilibrium are represented graphically. The Nash equilibrium is shown to be non-optimal, while the Lindahl equilibrium is shown to be optimal. Simple stability analyses are undertaken. Finally, the two equilibria are compared. It appears that more public good will be allocated in the Lindahl than in the Nash equilibrium, and that in a sufficiently large economy a transition from a Nash to a Lindahl equilibrium will be advantageous for everyone.
AB - In an economy with a public good the noncooperative Nash equilibrium and the cooperative Lindahl equilibrium are represented graphically. The Nash equilibrium is shown to be non-optimal, while the Lindahl equilibrium is shown to be optimal. Simple stability analyses are undertaken. Finally, the two equilibria are compared. It appears that more public good will be allocated in the Lindahl than in the Nash equilibrium, and that in a sufficiently large economy a transition from a Nash to a Lindahl equilibrium will be advantageous for everyone.
UR - http://www.scopus.com/inward/record.url?scp=34247184395&partnerID=8YFLogxK
U2 - 10.1016/0047-2727(76)90008-6
DO - 10.1016/0047-2727(76)90008-6
M3 - Article
AN - SCOPUS:34247184395
SN - 0047-2727
VL - 6
SP - 295
EP - 307
JO - Journal of Public Economics
JF - Journal of Public Economics
IS - 3
ER -