Blockchain and Ex-Ante Exclusion Mechanisms
8 Pages Posted: 18 Aug 2018 Last revised: 21 Dec 2018
Date Written: August 6, 2018
Club goods are ubiquitous: Parks, roads, tunnels, airports, bridges, sports clubs etc. These goods are often provided by governments. A key question is, should a club good be provided or not? To make an efficient provision decision, the government needs access to the private information people hold. Ignoring this information leads to inefficient decisions. This problem has been long known in the literature on mechanism design and allocation mechanism have been proposed which help to make more efficient decisions. However, we rarely see these mechanism being implemented in practice. Regarding private information, a startup faces a similar problem. It does not know whether consumers like a produce the startup wants to develop. Beginning with crowdfunding initiatives, and in recent years initial coin offerings (ICOs) based on the blockchain, startups can receive commitment from potential customers ex ante. This note discusses the possibility to issue tokens for club goods by governments. The purpose of using the blockchain is to improve the decision-making.
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