Strategy-Proof Allocation Mechanisms for Pure Public Goods Economies When Preferences are Monotonic
Universidad Carlos III de Madrid - Department of Economics
Economic Theory, Vol. 13, No. 1, 1999
A fundamental problem in public finance is that of allocating a given budget to financing the provision of public goods (education, transportation, police, etc.). In this paper it is established that when admissible preferences are those representable by continuous and increasing utility functions, then strategy-proof allocation mechanisms whose (undominated) range contains three or more outcomes are dictatorial on the set of profiles of strictly increasing utility functions, a dense subset of the domain in the topologies commonly used in this context. If admissible utility functions are further restricted to be strictly increasing, or if mechanisms are required to be non-wasteful, then strategy-proofness leads to (full) dictatorship.
JEL Classification: D60, D70, H40Accepted Paper Series
Date posted: January 5, 1999
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