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Article

Linguistic Equilibrium with Local and World Languages: Challenges of Globalization

World Economy. 2018. Vol. 41. No. 7. P. 1790-1811.
Shapoval A., Davydov D., Weber S.

In this paper we introduce a model of a society with two distinct linguistic groups, each consisting of heterogeneous individuals speaking their native language. There is also a world language so that every individual is faced with four learning choices: to study the other local language only, to study the world language only, to study both, and to refrain from studying either language. We examine the Nash equilibiria of that game determined by communicative benefits (Selten & Pool), and address inefficiency of the equilibrium. We then show that government subsidies for language learning could serve as welfare‐enhancing policies. Finally, we analyze the three‐language policy, certain variants of which have been adopted in multilingual countries or regions.