Efficient Mechanisms for Public Goods with Use Exclusions

UW-Madison SSRI Working Paper No. 2012

39 Pages Posted: 23 Nov 2000

See all articles by Peter Norman

Peter Norman

University of British Columbia - Department of Economics

Date Written: May 15, 2002

Abstract

This paper studies "voluntary bargaining agreements" in an environment where preferences over an excludable public good are private information. Unlike the case with a non-excludable public good, there are non-trivial conditions when there is significant provision in a large economy. The provision level converges in probability to a constant, which makes it possible to approximate the optimal solution by a simple fixed fee mechanism, which involves second degree price discrimination if identities are informative about the distribution of preferences. Truth-telling is a dominant strategy in the fixed fee mechanism. Being able to limit a public goods' consumption does not make it a turn-blue private good. For what, after all, are the true marginal costs of having one extra family tune in on the program. They are literally zero. Why then limit any family which would receive positive pleasure from tuning in on the program from doing so? [Samuelson [24], pp 335]

Keywords: Excludable Public Goods, Mechanism Design, Private Information, Asymmetric Information Bargaining

JEL Classification: D61, D82, H41

Suggested Citation

Norman, Peter, Efficient Mechanisms for Public Goods with Use Exclusions (May 15, 2002). UW-Madison SSRI Working Paper No. 2012, Available at SSRN: https://ssrn.com/abstract=249151 or http://dx.doi.org/10.2139/ssrn.249151

Peter Norman (Contact Author)

University of British Columbia - Department of Economics ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z2
Canada
(604) 822-2839 (Phone)

HOME PAGE: http://faculty.arts.ubc.ca/pnorman/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
210
Abstract Views
2,045
rank
172,535
PlumX Metrics