Implementation of Lindahl equilibrium: an integration of the static and dynamic approaches

Abstract

A language (message space) and allocation rules (outcome function) are specified which, at Nash equilibria of the associated game, implement the Lindahl performance under different technological assumptions. This purely static approach is complemented by showing that myopically optimal adjustment on the part of agents guarantees, from any initial conditions, convergence to one of the former Nash equilibria. Since, moreover, the set of such Nash equilibria and that of stationary points of the adjustment process coincide, our results can be regarded as an integration of the static and dynamic approaches to the implementation of Lindahl performance.