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Nash-Cournot or Lindahl Behavior?: An Empirical Test for the Nato Allies

Todd Sandler¹; James C. Murdoch²

¹ Iowa State University · ² University of Texas at Dallas

This paper derives systems of demand equations for distinguishing between Nash-Cournot and Lindahl behavior in a group that either shares a pure public good or an activity that provides a private and a pure public joint product. Systems of simultaneous equations are estimated based upon Nash-Cournot and Lindahl behavior for a sample of ten NATO allies for the 1956–1987 period. Nonnested hypothesis tests support the Nash-Cournot specification for five of the ten sample allies. No evidence of Lindahl behavior is found. The Nash-Cournot joint-product specification outperforms the pure public model for all sample allies.

DOI

10.2307/2937877

Volume

105 (4)

Pages

875

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