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Sharing the cost of a public good: An incentive-constrained axiomatic approach

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  • MANIQUET, François
  • SPRUMONT, Yves

Abstract

We study the problem of provision and cost-sharing of a public good in large economies where exclusion, complete or partial, is possible. We search for incentive-constrained efficient allocation rules that display fairness properties. Population monotonicity says that an increase in population should not be detrimental to anyone. Demand monotonicity states that an increase in the demand for the public good (in the sense of a first-order stochastic dominance shift in the distribution of preferences) should not be detrimental to any agent whose preferences remain unchanged. Under suitable domain restrictions, there exists a unique incentive-constrained efficient and demand-monotonic allocation rule: the so-called serial rule. In the binary public good case, the serial rule is also the only incentive-constrained efficient and population-monotonic rule.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number -2184.

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Handle: RePEc:cor:louvrp:-2184

Note: In : Games and Economic Behavior, 68, 275-302, 2010
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  1. Green, Jerry & Laffont, Jean-Jacques, 1977. "Characterization of Satisfactory Mechanisms for the Revelation of Preferences for Public Goods," Econometrica, Econometric Society, Econometric Society, vol. 45(2), pages 427-38, March.
  2. Sprumont, Y., 1996. "Equal Factor Equivalence in Economies with Multiple Public Goods," Cahiers de recherche, Centre interuniversitaire de recherche en économie quantitative, CIREQ 9627, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  3. Dreze, Jacques H., 1980. "Public goods with exclusion," Journal of Public Economics, Elsevier, Elsevier, vol. 13(1), pages 5-24, February.
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  6. Hellwig, Martin, 2003. "A Utilitarian Approach to the Provision and Pricing of Excludable Public Goods," Sonderforschungsbereich 504 Publications, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim 03-36, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  7. MANIQUET, François, . "Implementation of allocation rules under perfect information," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1734, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. MANIQUET, François & SPRUMONT, Yves, 2002. "Fair Production and Allocation of an Excludable Nonrival Good," Cahiers de recherche, Universite de Montreal, Departement de sciences economiques 2002-04, Universite de Montreal, Departement de sciences economiques.
  9. Crawford, Vincent P, 1979. "A Procedure for Generating Pareto-Efficient Egalitarian-Equivalent Allocations," Econometrica, Econometric Society, Econometric Society, vol. 47(1), pages 49-60, January.
  10. Maniquet, Francois & Sprumont, Yves, 2005. "Welfare egalitarianism in non-rival environments," Journal of Economic Theory, Elsevier, Elsevier, vol. 120(2), pages 155-174, February.
  11. Kaneko, Mamoru, 1977. "The Ratio Equilibria and the Core of the Voting Game G(N, W) in a Public Goods Economy," Econometrica, Econometric Society, Econometric Society, vol. 45(7), pages 1589-94, October.
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  19. Moulin, Herve, 1994. "Serial Cost-Sharing of Excludable Public Goods," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 61(2), pages 305-25, April.
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Cited by:
  1. Moreno-Ternero, Juan D. & Roemer, John E., 2012. "A common ground for resource and welfare egalitarianism," Games and Economic Behavior, Elsevier, Elsevier, vol. 75(2), pages 832-841.
  2. Geoffroy de Clippel, 2010. "Copmment on Egalitarianism under Incomplete Information," Working Papers 2010-4, Brown University, Department of Economics.
  3. Athanasiou, Efthymios, 2013. "A Solomonic solution to the problem of assigning a private indivisible good," Games and Economic Behavior, Elsevier, Elsevier, vol. 82(C), pages 369-387.

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