Adam Smith Business School

Professor Anne van Den Nouweland, University of Oregon

"Local Public Good Equilibrium"
Wednesday, 7 February. 13:00
Room 141 ASBS PGT

Abstract

We extend the ratio equilibrium concept (Kaneko, 1977a,b) to local public good economies by defining and analyzing Local Public Good Equilibrium (LPGE).We show LPGE existence for a far wider class of economies than prior work seeking to extend ratio equilibrium to local public good economies. In particular, we prove LPGE existence with (i) heterogeneous agents, (ii) a finite number of agents and jurisdictions, (iii) endogenous jurisdictional revenues and expenditures, and (iv) robustness against coalitional deviations. We employ “share functions” for individual agents that allow easy comparisons of consumption utility, both across consumption bundles and across jurisdiction memberships. Share functions furthermore aggregate for parsimonious calculation of equilibrium public good provision within each potential jurisdiction, allowing us to establish a link with hedonic games and deploy results from that literature. LPGE admits wide-ranging jurisdiction structures, and we obtain results on sorting, segregation, and snob effects that have attracted interest in the extant literature.

Bio

Anne van den Nouweland completed her PhD at Tilburg University (Netherlands) in 1993 and held a position as assistant professor (Universitair Docent) there until she moved to the University of Oregon (USA) in 1996 to take a tenure track position. She specializes in game theory. Her earlier work is on game theoretic models of networks in economics. More recently, she has been studying farsightedness of agents and (local) public good economies. Her most recent work uses links between local public good economies and hedonic games to demonstrate how segregation and sorting can emerge endogenously in local public good economies.

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First published: 17 January 2024