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Bargaining over Public Goods |
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| Authors: | JULIO DÁ VILA,JAN EECKHOUT,CÉ SAR MARTINELLI |
| Affiliation: | Universitécatholique de Louvain and Paris School of Economics; University of Pennsylvania and Universitat Pompeu Fabra; Centro de Investigación Económica, Instituto Tecnológico Autónomo de México |
| Abstract: | In a simple public good economy, we propose a natural bargaining procedure, the equilibria of which converge to Lindahl allocations as the cost of bargaining vanishes. The procedure splits the decision over the allocation in a decision about personalized prices and a decision about output levels for the public good. Since this procedure does not assume price-taking behavior, it provides a strategic foundation for the personalized taxes inherent in the Lindahl solution to the public goods problem. |
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