Implementing the Lindahl voluntary-exchange mechanism

Leif Danziger, Adi Schnytzer

Research output: Contribution to journalArticlepeer-review

44 Scopus citations

Abstract

This paper analyzes a two-stage game for implementing Lindahl's voluntary-exchange mechanism. The game is based on a model of matching behavior suggested by Guttman (1978). Both the price and the quantities purchased of the public good are individualized, and Lindahl prices emerge endogenously in the first stage of the game. It is shown that any perfect equilibrium with a positive provision of the public good is a Lindahl equilibrium. There might also exist nonprovision perfect equilibria that are Pareto dominated by Lindahl equilibria with positive provision of the public good.

Original languageEnglish
Pages (from-to)55-64
Number of pages10
JournalEuropean Journal of Political Economy
Volume7
Issue number1
DOIs
StatePublished - 1 Jan 1991
Externally publishedYes

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