Publication: A note on Lindahl equilibria and incentive compatibility
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1988
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Universidad Complutense de Madrid. Facultad de Ciencias Económicas y Empresariales
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Abstract
We show that if there are Constant Returns to Scale in the production of the
public good a) Any Lindahl equilibrium (L.E) is a Hash equilib:-iurn (N.E.) in
a price-setting game, b) not all N.E. ~-e L.E., but just those fo:- which the
production of the public good is positive and c) the set of L.E. and Strong
Equilibria coincide. However if the supply function is continuously differentiable,
L.E. is never a N.E. We end the paper with sorne general comments about
the nature of the incentive problem.