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Dynamic Voluntary Provision of Public Goods and Optimal Steady‐State Subsidies
Author(s) -
YANASE AKIHIKO
Publication year - 2006
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/j.1467-9779.2006.00258.x
Subject(s) - subsidy , economics , public good , microeconomics , simple (philosophy) , externality , turnover , private good , steady state (chemistry) , state (computer science) , public economics , market economy , computer science , philosophy , chemistry , management , epistemology , algorithm
This paper examines a differential game model of voluntary provision of a public good in which private agents' contributions accumulate over time and derives subsidy rules that achieve the socially efficient steady state. It is shown that the optimal subsidy rule is a simple one when agents use the open‐loop strategy, while under Markovian strategies it intricately depends on the parameters of the economy.