Nouweland, Anne van den, Tijs, Stef and Wooders, Myrna Holtz (2001) Axiomatization of ratio equilibria in public good economies. Working Paper. Coventry: University of Warwick, Department of Economics. (Warwick economic research papers.

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Abstract

Using consistency properties, we characterize the cost-sharing scheme arising from the ratio equilibrium concept for economies with public goods. The characterization turns out to be surprisingly simple and direct. In contrast to most axiomatic characterizations based on reduced games and consistency properties, our characterization requires that in the reduced game, the players take as given the proportions of the costs paid by the members of the complementary player set, rather than their utility levels.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Consistency requirements (Accounting), Equilibrium (Economics), Axiomatic set theory, Public goods, Welfare economics
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	26 February 2001
Number:	No.585
Number of Pages:	19
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Funder:	Social Sciences and Humanities Research Council of Canada (SSHRC)
References:	[1] Aumann, R.J. and Maschler, M. (1985) Game theoretic analysis of a bankruptcy problem from the Talmud. Journal of Economic Theory 36, 195-213. [2] Diamantaras, D. (1992) An axiomatic study of economies with many private and public goods. Typescript, Department of Economics, Temple University, Philadelphia. [3] Johansen, L. (1963) Some notes on the Lindahl theory of determination of public expenditures. International Economic Review 4, 346-358. [4] Kaneko, M. (1977a) The ratio equilibrium and a voting game in a public goods economy Journal of Economic Theory 16, 123-136. [5] Kaneko, M. (1977b) The ratio equilibria and the core of the voting game G(N,w) in a public goods economy. Econometrica 45, 1589-1594. [6] Lindahl, E. (1919) Just taxation-a positive solution. In: Classics in the Theory of Public Finance (Eds. R. Musgrave and A. Peacock) (1958), Macmillan, London, United Kingdom. [7] Mas-Colell, A. and Silvestre, J. (1989) Cost share equilibria. Journal of Economic Theory 47, 239-256. [8] Peleg, B. (1986) On the reduced game property and its converse. International Journal of Game Theory 15, 187-200. A correction (1987), International Journal of Game Theory 16, 290. [9] Peleg, B. and Tijs, S. (1996) The consistency principle for games in strategic form. International Journal of Game Theory 25, 13-34. [10] Samuelson, P. (1954) The pure theory of public expenditures. Review of Economics and Statistics 36, 387-389. [11] Thomson, W. (1988) A study of choice correspondences in economies with a variable number of agents. Journal of Economic Theory 46, 237-254. [12] Thomson, W. (1990) The consistency principle. In: Game Theory and Applications (Eds. T. Ischiishi, A. Neyman, and Y. Tauman) Academic Press, San Diego, California. [13] Van den Nouweland, A., Peleg, B., and Tijs, S. (1996) Axiomatic characterizations of the Walras solution for generalized economies. Journal of Mathematical Economics 25, 355-372.
URI:	http://wrap.warwick.ac.uk/id/eprint/1593

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