Neutral Public Good Mechanisms

Abstract

In this paper, I characterize neutral mechanisms for the provision of a public good. I show that neutral mechanisms form a reasonable set of predictions for mechanism selection in public goods problems; such predictions are sufficiently sharp, robust to a perturbation of the information structure at the time of selection, and invulnerable to the possibility of information leakage. I also illustrate that neutral mechanisms have the desirable properties of both efficiency and equity and can be conveniently computed by the tractable set of conditions. These results are shown to have interesting implications for the analysis of ex ante and interim incentive efficient mechanisms for public goods problems.

Keywords: Public goods, Mechanism design, Neutral optimum, Interim efficiency, Ex ante efficiency, Almost ex ante stage

JEL Classification: C71, C78, D74, D82, H41