Arbitration of Exchange Situations with Public Goods

Abstract

A small number of players are in a situation involving the possible production of public goods which may benefit all of them. The situation involves a finite number of private goods, owned individually, which can be used for the production of the public goods and for exchanges and sidepayments in an overall compromise. The paper defines a noncooperative game for the participants whose outcomes are compromises in the exchange situations. When played optimally, the game yields outcomes which are in the core of the change situation.