A strategic market game approach for the private provision of public goods

Bergstrom, Blume and Varian [4] provides an elegant game-theoretic model of an economy with one private good and one public good. Strategies of players consist of voluntary contributions of the private good to public good production. Without relying on first order conditions, as in prior literature, the authors demonstrate existence of Nash equilibrium. The assumption of one-private good greatly facilities the results. We provide an analogue of the Bergstrom, Blume and Varian result in a model allowing multiple private and public goods. In addition, we relate the strategic market game equilibrium to the private-provision equilibrium of Villanacci and Zenginobuz [17], which provides a counter-part to the Walrasian equilibrium for a public goods economy. To obtain our results we introduce a model of a strategic market game with public goods. Our approach also incorporates, into the strategic market game literature, economies with production.