Table 1 presents the payoffs associated with the decision of two players whether to contribute or not contribute to national defense

Table 1

Contribute(C) Non Contribute (NC)

Contribute(C) 5,1 2,2

Non Contribute (NC) 4,4 1,5

a) explain why the potential outcome (C, C) is not an equilibrium.

b) explain why the potential outcome (C, C) is efficient.

c) explain why a common external threat is a public good in the context of the study by Dinneco and Prado (2012).

d) explain why in the period preceding the pre-Napoleonic Wars the tax payments paid to the central government could be viewed as voluntary contributions.

e) Calculate the size of the common external threat such than (C, C) becomes an equilibrium.

f) explain why a large enough common external threat during the Napoleonic Wars led to an increase in tax payments in the affected by the Napoleonic Wars countries.

g)explain why the implementation outcomes in the fiscal reform carried out during the Napoleonic Wars were crucial for transforming the voluntary contributions into tax payments