This book presents a theoretical treatment of externalities (i.e. uncompensated interdependencies), public goods, and club goods. The new edition updates and expands the discussion of externalities and their implications, coverage of asymmetric information, underlying game-theoretic formulations, and intuitive and graphical presentations. Aimed at well-prepared undergraduates and graduate students making a serious foray into this branch of economics, the analysis should also interest professional economists wishing to survey recent advances in the field. No other single source for the range of materials explored is currently available. Topics investigated include Nash equilibrium, Lindahl equilibria, club theory, preference-revelation mechanism, Pigouvian taxes, the commons, Coase Theorem, and static and repeated games. The authors use mathematical techniques only as much as necessary to pursue the economic argument. They develop key principles of public economics that are useful for subfields such as public choice, labor economics, economic growth, international economics, environmental and natural resource economics, and industrial organization.
• Revised edition of 1986 CUP work covering key issue of externalities (unintended developments) in economic theory • Authors well-known in field; revised edition addresses their critics and greatly expands coverage of novel issues in asymmetric information, externalities, the Coase Theorem, etc. • Useful for upper-level undergraduates, master's level, and first year graduate students in economic theory courses; revised treatment will also appeal to business and government analysts
Preface; Part I. Introduction to the Theory of Externalities, Public Goods, and Club Goods: 1. Views on market failure; 2. Equilibrium concepts in public economics; Part II. Externalities: 3. Theory of externalities; 4. Externalities, equilibrium, and optimality; 5. Information and externalities; Part III. Public Goods: 6. Pure public goods: Nash-Cournot equilibria and Pareto optimality; 7. Alternative mechanisms for the provision of public goods; 8. Public goods in general; 9. Game theory and public goods; 10. Departures from the Nash-Cournot behavior; Part IV. Clubs and Club Goods: 11. Homogeneous clubs and local public goods; 12. Clubs in general; 13. Institutional forms and clubs; 14. Game theory and club goods; 15. Uncertainty and club goods; 16. Intergenerational clubs; Part V. Applications and Future Directions: 17. Empirical estimation and public goods; 18. Applications and empirics; 19. Conclusions.