Non-cooperative Behavior and Efficient Provision of Public Goods

The authors show that, on the basis of a noncooperative equilibrium whereby pure public goods are financed by voluntary private contributions, a centralized agency may induce an efficient solution by an appropriate choice of subsidy on the individuals' contributions. They also show that a noncooperative equilibrium with positive contributions is efficient if, and only if, the individual per unit subsidies sum to n - 1, where n is the number of individuals. They finally establish a correspondence between noncooperative and Lindahl equilibria.