Serial Cost-Sharing of Excludable Public Goods

Herve J. Moulin

152 citations0/0 files storedThe Review of Economic Studies

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Game Theory and Voting Systems Auction Theory and Applications Economic Policies and Impacts

Abstract

Under the “Conservative Equal costs” mechanism to produce a non-excludable (one-dimensional) public good, each agent reports his demand. The lowest reported demand of public good is produced and its cost is shared equally among all agents. When the cost of producing the public good is convex, this mechanism is strategy-proof (even with respect to coalitions), anonymous and induces voluntary participation. No other mechanism shares these three properties. When the public good is excludable (its cost still convex), there is a mechanism with the same properties, that everyone prefers to conservative equal costs. This mechanism excludes the agent with the lowest (equal costs) demand from consuming (or paying for) a larger amount of the good, ameliorating the free-rider problem.

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References

1973Incentives in Teams 1971Multipart pricing of public goods 1973Manipulation of Voting Schemes: A General Result 1975Strategy-proofness and Arrow's conditions: Existence and correspondence theorems for voting procedures and social welfare functions 1967Resource allocation and the public sector 1990Nash equilibrium with strategic complementarities 1980On strategy-proofness and single peakedness 1977Optimal Allocation of Public Goods: A Solution to the "Free Rider" Problem

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2011Strategyproof Social Choice 2001The Theory and Measurement of Passive‐Use Value 2004Efficient Mechanisms for Public Goods with Use Exclusions 2013Proportional sharing and DEA in allocating the fixed cost 1999Auction-Like Mechanisms for Pricing Excludable Public Goods 2017Proposing a method for fixed cost allocation using DEA based on the efficiency invariance and common set of weights principles

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