decisions about the level of the public good. We derive a number of interesting results: i) Political competition is a necessary … competition, these institutions implement the Lindahl allocation in the economy as a sub-game perfect Nash equilibrium of the …

create externalities among workers, since their utility upon accepting a contract depends on their team's performance and … therefore on their colleagues' productivity. We study the effects of such externalities in a competitive labor market if workers …-efficient separation of workers according to their productivity. We further find that externalities facilitate equilibrium existence, where …