An Efficiency Rationale for the Bundling of Public Goods
AbstractThis paper studies the role of bundling in the efficient provision of excludable public goods. We show that bundling in the provision of unrelated public goods can enhance social welfare. With a large number of goods and agents, first best can be approximated with pure bundling. For a parametric class of problems with binary valuations, we characterize the optimal mechanism, and show that bundling alleviates the free riding problem in large economies and decreases the extent of use exclusions. Both results are related to the idea that bundling makes it possible to reduce the incidence of exclusions because the variance in the relevant valuations decreases
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Bibliographic InfoPaper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 458.
Date of creation: 11 Aug 2004
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Public goods provision; bundling; exclusion;
Find related papers by JEL classification:
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
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- Suman Ghosh & Alexander Karaivanov & Mandar Oak, 2005.
"A Case for Bundling Public Goods Contributions?,"
05005, Department of Economics, College of Business, Florida Atlantic University.
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