The egalitarian sharing rule in provision of public projects

TL;DR

This paper examines an egalitarian sharing rule for public project provision across society's jurisdictions, ensuring cost equality and efficiency, resulting in stable partitions but not necessarily Nash stability.

Contribution

It introduces a model combining egalitarianism and efficiency principles in public project location and funding, proving core stability of partitions.

Findings

Core-stable partitions always exist under the model.

Nash stable partitions may not exist.

The model accommodates multi-dimensional projects with varying costs.

Abstract

In this note we consider a society that partitions itself into disjoint jurisdictions, each choosing a location of its public project and a taxation scheme to finance it. The set of public project is multi-dimensional, and their costs could vary from jurisdiction to jurisdiction. We impose two principles, egalitarianism, that requires the equalization of the total cost for all agents in the same jurisdiction, and efficiency, that implies the minimization of the aggregate total cost within jurisdiction. We show that these two principles always yield a core-stable partition but a Nash stable partition may fail to exist.