Public-Good Provision in a Large Economy

51 Pages Posted: 7 Jan 2010

See all articles by Felix J. Bierbrauer

Felix J. Bierbrauer

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

Martin F. Hellwig

Max Planck Institute for Research on Collective Goods; University of Bonn - Department of Economics

Date Written: December 1, 2009

Abstract

We propose a new approach to the normative analysis of public-good provision in a large economy. Our analysis is based on a mechanism design approach that involves a requirement of coalition-proofness, as well as a requirement of robustness, so that the mechanism must not depend on specific assumptions about individual beliefs. Our main result shows that such a mechanism can condition only on the population shares of people with valuations above and below the per capita provision costs. This suggests an intriguing link between mechanism design for large economies and voting.

Keywords: Large Economy, Mechanism Design, Public-good provision

JEL Classification: D6, D7, D82, H41

Suggested Citation

Bierbrauer, Felix J. and Hellwig, Martin F., Public-Good Provision in a Large Economy (December 1, 2009). MPI Collective Goods Preprint, No. 2010/02. Available at SSRN: https://ssrn.com/abstract=1532160 or http://dx.doi.org/10.2139/ssrn.1532160

Felix J. Bierbrauer

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

Martin F. Hellwig (Contact Author)

Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

University of Bonn - Department of Economics

Adenauerallee 24-42
D-53113 Bonn
Germany

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