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A voluntary participation game through a unit-by-unit cost share mechanism of a non-excludable public good

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  • Yukihiro Nishimura

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  • Ryusuke Shinohara

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    Abstract

    The strategic analysis of voluntary participation in the public good provision has shown two distinct results. First, when the provision of public goods is binary, there are Nash equilibria supporting efficient allocations, and these are Strong Nash equilibria of the game. On the other hand, a model of a continuous public good (Saijo–Yamato, J Econ Theory 84:227–242, 1999 ) showed that the participation of all agents is not an equilibrium in many situations. This article considers the provision of a discrete and multi-unit public good, and examines a unit-by-unit participation game. Namely, people are asked to participate in each unit of public good provision, and those who chose to participate share the marginal cost of public good. In this game of public good provision, there are subgame-perfect equilibria that are Pareto efficient. We also use the refinement concepts to eliminate inefficient subgame-perfect equilibria and also to characterize the efficient subgame-perfect equilibria. Copyright Springer-Verlag 2013

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    Bibliographic Info

    Article provided by Springer in its journal Social Choice and Welfare.

    Volume (Year): 40 (2013)
    Issue (Month): 3 (March)
    Pages: 793-814

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    Handle: RePEc:spr:sochwe:v:40:y:2013:i:3:p:793-814

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    1. Ryusuke Shinohara, 2009. "The possibility of efficient provision of a public good in voluntary participation games," Social Choice and Welfare, Springer, vol. 32(3), pages 367-387, March.
    2. Theodore Groves & John Ledyard, 1976. "Optimal Allocation of Public Goods: A Solution to the 'Free Rider Problem'," Discussion Papers 144, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    3. Tatsuyoshi Saijo & Takehiko Yamato, 2010. "Fundamental impossibility theorems on voluntary participation in the provision of non-excludable public goods," Review of Economic Design, Springer, vol. 14(1), pages 51-73, March.
    4. Paul Healy, 2010. "Equilibrium participation in public goods allocations," Review of Economic Design, Springer, vol. 14(1), pages 27-50, March.
    5. Saijo, Tatsuyoshi & Yamato, Takehiko, 1999. "A Voluntary Participation Game with a Non-excludable Public Good," Journal of Economic Theory, Elsevier, vol. 84(2), pages 227-242, February.
    6. Dixit, Avinash & Olson, Mancur, 2000. "Does voluntary participation undermine the Coase Theorem?," Journal of Public Economics, Elsevier, vol. 76(3), pages 309-335, June.
    7. Konishi, Hideo & Furusawa, Taiji, 2011. "Contributing or free-riding? Voluntary participation in a public good economy," Theoretical Economics, Econometric Society, vol. 6(2), May.
    8. Tatsuyoshi Saijo, 2003. "Non-Excludable Public Good Experiments," Theory workshop papers 505798000000000027, UCLA Department of Economics.
    9. Timothy Cason & Tatsuyoshi Saijo & Takehiko Yamato, 2002. "Voluntary Participation and Spite in Public Good Provision Experiments: An International Comparison," Experimental Economics, Springer, vol. 5(2), pages 133-153, October.
    10. Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, vol. 49(1), pages 65-71, January.
    11. Cavaliere, Alberto, 2001. " Coordination and the Provision of Discrete Public Goods by Correlated Equilibria," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 3(3), pages 235-55.
    12. Palfrey, Thomas R. & Rosenthal, Howard, 1984. "Participation and the provision of discrete public goods: a strategic analysis," Journal of Public Economics, Elsevier, vol. 24(2), pages 171-193, July.
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