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Bargaining by Limiting Cooperation: Withholding Consent for the Level of a Public Good
Author(s) -
BURTON PETER S.
Publication year - 2008
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.1467-9779.2008.00379.x
Subject(s) - public good , economics , limiting , outcome (game theory) , marginal cost , attrition , microeconomics , substitution (logic) , private good , private information retrieval , marginal utility , limit (mathematics) , public economics , mathematics , mechanical engineering , medicine , mathematical analysis , programming language , statistics , dentistry , computer science , engineering
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.