Voluntary Participation in the Design of Non-excludable Public Goods Provision Mechanisms
AbstractGroves-Ledyard (1977) constructed a mechanism attaining Pareto efficient allocations in the presence of public goods. After this path-breaking paper, many mechanisms have been proposed to attain desirable allocations with public goods. Thus, economists have thought that the free-rider problem is solved, in theory. Our view to this problem is not so optimistic. Rather, we propose fundamental impossibility theorems with public goods. In the previous mechanism design, it was implicitly assumed that every agent must participate in the mechanism that the designer provides. This approach neglects one of the basic features of public goods: non-excludability. We explicitly incorporate non-excludability and then show that it is impossible to construct a mechanism in which every agent has an incentive to participate.
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Bibliographic InfoPaper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0559.
Date of creation: Oct 2001
Date of revision:
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- Cason, T.N. & Saijo, T. & Yamato, T., 2000.
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ISER Discussion Paper
0491, Institute of Social and Economic Research, Osaka University.
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- Tatsuyoshi Saijo & Takehiko Yamato & Konomu Yokotani, 2003. "Non-Excludable Public Good Experiments revised October 2003, forthcoming in Games and Economic Behavior," Discussion papers 03011, Research Institute of Economy, Trade and Industry (RIETI).
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