Cournot–Nash and Lindahl Equilibria in Pure Public Good Economies

Abstract

In this paper, we derive qualitative and asymptotic results on Cournot–Nash and Lindahl equilibria in pure public good economies. In a discrete finite economy with similar consumers (e.g., sharing the same Cobb–Douglas utility), we show that the consumer with the biggest initial endowment prefers the proportional Lindahl over his Cournot–Nash bundle. The asymptotic results are derived using a model of a mixed economy with an atomless sector of consumers as an idealization for economies with few influential players and many very small consumers. Conditions which ensure that all consumers prefer the Pareto-efficient Lindahl allocation over the non-cooperative Cournot–Nash allocation were specified.Journal of Economic LiteratureClassification Numbers: C72, D50, D60, H41.