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Financial Control of a Competitive Economy with Public Goods but Without Randomness


  • Ioannis Karatzas, Department of Mathematics, Columbia University, MailCode 4438, New York, NY 10027 ( and INTECH Investment Management, One Palmer Square, Suite 441, Princeton, NJ 08542 ( Martin Shubik, Cowles Foundation for Research in Economics, Yale University, 30 Hillhouse Avenue, New Haven, CT 06520 ( William D. Sudderth, School of Statistics, 313 Ford Hall, University of Minnesota, Minneapolis, MN 55455 (


The monetary and fiscal control of a simple economy without outside randomness is studied here from the microeconomic basis of a strategic market game. The government’s bureaucracy is treated as a public good that provides services at a cost. A conventional public good is also considered.