1. Bargaining by Limiting Cooperation: Withholding Consent for the Level of a Public Good
- Author
-
Peter Burton
- Subjects
Marginal cost ,Private good ,Microeconomics ,Economics and Econometrics ,Sociology and Political Science ,Public economics ,Complete information ,Economics ,Lower cost ,Limiting ,Public good ,Outcome (game theory) ,Finance - Abstract
This paper analyzes how the ability to limit cooperation influences the outcome of complete information bargaining between two players. When cooperation involves prompt resolution of a conflict, as in alternating-offer games and wars-of-attrition, the solutions equate the marginal rates of substitution between earlier resolution and more private goods. When cooperation involves consent for the level of a public good, the outcome again equates the marginal rates of substitution between greater cooperation (more public good) and more private goods (lower cost shares). Here, the equilibrium consists of balanced linear cost shares given by the ratio of marginal-willingness-to-pay to marginal cost.
- Published
- 2008
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