Buchholz, Wolfgang; Konrad, Kai A.; Lommerud, Kjell Erik
Stackelberg leadership and transfers in private provision of public goods.
In: Review of Economic Design, Vol. 3, Nr. 1: S. 29-43
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We consider transfers in a Stackelberg game of private provision of a public good. It turns out that the agent who is the follower in the process of making voluntary contributions to a public good may have an incentive to make monetary transfers to the Stackelberg leader even in a situation where neither has a comparative advantage in making contributions to the public good. The Stackelberg leader is willing to accept such transfers if the actual contribution game is fully non-cooperative because the transfer generates a Pareto superior outcome. If the contributions in the Stackelberg equilibrium is the threat point of a possible cooperative Nash bargaining game, the Stackelberg leader will refuse to accept the transfer if she can. © Springer-Verlag 1997.