Abstract

http://ssrn.com/abstract=1532168
 
 

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An Incomplete Contracts Perspective on the Provision and Pricing of Excludable Public Goods


Felix J. Bierbrauer


Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods

April 2010

MPI Collective Goods Preprint, No. 2010/01

Abstract:     
We study whether a firm that produces and sells access to an excludable public good should face a self-financing requirement, or, alternatively, receive subsidies that help to cover the cost of public-goods provision. The main result is that the desirability of a self-financing requirement is shaped by an equity-efficiency trade-off: While first-best efficiency is out of reach with such a requirement, its imposition limits the firm's ability of rent extraction. Hence, consumer surplus may be higher if the firm has no access to public funds.

Number of Pages in PDF File: 43

Keywords: Incomplete Contracts, Excludable Public Goods, Regulation

JEL Classification: D82, D86, H41, L51

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Date posted: January 7, 2010 ; Last revised: April 26, 2010

Suggested Citation

Bierbrauer, Felix J., An Incomplete Contracts Perspective on the Provision and Pricing of Excludable Public Goods (April 2010). MPI Collective Goods Preprint, No. 2010/01. Available at SSRN: http://ssrn.com/abstract=1532168 or http://dx.doi.org/10.2139/ssrn.1532168

Contact Information

Felix J. Bierbrauer (Contact Author)
Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )
Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany
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