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Matching as a Cure for Underprovision of Voluntary Public Good Supply: Analysis and an Example

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  • Wolfgang Buchholz
  • Richard Cornes
  • Dirk Rübbelke

Abstract

Matching mechanisms are regarded as an important instrument to bring about Pareto optimal allocations in a public good economy and to cure the underprovision problem associated with private provision of public goods. The desired Pareto optimal interior matching equilibrium, however, emerges only under very special conditions. But we show in this note that corner solutions, in which some agents choose zero flat contributions, normally avoid underprovision and illustrate and interpret our results by a simple numerical example.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3374.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3374

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Keywords: public goods; matching; Pareto optimality;

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  1. Cornes, Richard & Sandler, Todd, 2000. "Pareto-Improving Redistribution and Pure Public Goods," Staff General Research Papers, Iowa State University, Department of Economics 1833, Iowa State University, Department of Economics.
  2. Georg Kirchsteiger & Clemens Puppe, 1997. "On the possibility of efficient private provision of public goods through government subsidies," ULB Institutional Repository, ULB -- Universite Libre de Bruxelles 2013/5913, ULB -- Universite Libre de Bruxelles.
  3. Schlesinger, Harris, 1989. "On the Analytics of Pure Public Good Provision," Public Finance = Finances publiques, , , vol. 44(1), pages 102-09.
  4. Varian, Hal R., 1994. "Sequential contributions to public goods," Journal of Public Economics, Elsevier, Elsevier, vol. 53(2), pages 165-186, February.
  5. Richard Cornes & Roger Hartley, 2003. "Aggregative Public Goods Games," NajEcon Working Paper Reviews, www.najecon.org 666156000000000063, www.najecon.org.
  6. Boadway,Robin & Pestieau,Pierre & Wildasin,David, 1986. "Tax-transfer policies and the voluntary provision of public goods," Discussion Paper Serie A, University of Bonn, Germany 130, University of Bonn, Germany.
  7. Josef Falkinger & Johann K. Brunner, 1999. "Taxation in an economy with private provision of public goods," Review of Economic Design, Springer, Springer, vol. 4(4), pages 357-379.
  8. Danziger, Leif & Schnytzer, Adi, 1991. "Implementing the Lindahl voluntary-exchange mechanism," European Journal of Political Economy, Elsevier, Elsevier, vol. 7(1), pages 55-64, April.
  9. Robin Boadway & Zhen Song & Jean-Francois Tremblay, 2006. "Commitment and Matching Contributions to Public Goods," Working Papers, Queen's University, Department of Economics 1067, Queen's University, Department of Economics.
  10. Falkinger, Josef, 1996. "Efficient private provision of public goods by rewarding deviations from average," Journal of Public Economics, Elsevier, Elsevier, vol. 62(3), pages 413-422, November.
  11. Bergstrom, Theodore C & Cornes, Richard C, 1983. "Independence of Allocative Efficiency from Distribution in the Theory of Public Goods," Econometrica, Econometric Society, Econometric Society, vol. 51(6), pages 1753-65, November.
  12. Buchholz, Wolfgang & Cornes, Richard & Rübbelke, Dirk, 2011. "Interior matching equilibria in a public good economy: An aggregative game approach," Journal of Public Economics, Elsevier, Elsevier, vol. 95(7-8), pages 639-645, August.
  13. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521477185.
  14. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, Elsevier, vol. 29(1), pages 25-49, February.
  15. Thomson, William, 1999. " Economies with Public Goods: An Elementary Geometric Exposition," Journal of Public Economic Theory, Association for Public Economic Theory, Association for Public Economic Theory, vol. 1(1), pages 139-76.
  16. Guttman, Joel M, 1978. "Understanding Collective Action: Matching Behavior," American Economic Review, American Economic Association, American Economic Association, vol. 68(2), pages 251-55, May.
  17. Althammer, Wilhelm & Buchholz, Wolfgang, 1993. "Lindahl-equilibria as the outcome of a non-cooperative game : A reconsideration," European Journal of Political Economy, Elsevier, Elsevier, vol. 9(3), pages 399-405, August.
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