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Public goods, participation constraints, and democracy: A possibility theorem

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  • Grüner, Hans Peter
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    Abstract

    It is well known that ex post efficient mechanisms for the provision of indivisible public goods are not interim individually rational. However, the corresponding literature assumes that agents who veto a mechanism can enforce a situation in which the public good is never provided. This paper instead considers majority voting with uniform cost sharing as the relevant status quo. Efficient mechanisms may then exist, which also satisfy all agents' interim participation constraints. In this case, ex post inefficient voting mechanisms can be replaced by efficient ones without reducing any individual's expected utility. Intuitively, agents with a low willingness to pay have to contribute more under majority rule than under an efficient mechanism with a balanced budget. This possibility theorem is not universal in the sense of Schweizer (Games and Economic Behavior, 2005).

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    Bibliographic Info

    Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7066.

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    Date of creation: Dec 2008
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    Handle: RePEc:cpr:ceprdp:7066

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    Related research

    Keywords: Ex post efficiency; Majority voting; Participation constraints; Possibility theorem; Public goods;

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    Cited by:
    1. Bierbrauer, Felix, 2009. "On the legitimacy of coercion for the nancing of public goods," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 265, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    2. Felix Bierbrauer, 2009. "On the legitimacy of coercion for the financing of public goods," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2009_15, Max Planck Institute for Research on Collective Goods.
    3. Felix Bierbrauer, 2009. "On the Legitimacy of Coercion for the Financing of Public Goods," CESifo Working Paper Series 2663, CESifo Group Munich.

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