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Efficient Mechanisms for Multiple Public Goods

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  • Suresh Mutuswami
  • Eyal Winter

Abstract

We propose two sequential mechanisms for efficient production of public goods. Our analysis differs from the existing literature in allowing for the presence of multiple public goods and in also being “simple.” While both mechanisms ensure efficiency, the payoffs in the first mechanism are asymmetric, being sensitive to the order in which agents move. The second mechanism corrects for this through a two-stage game where the order of moves in the second stage are randomly determined. The payoffs from the second mechanism correspond to the Shapley value of a well-defined game which summarizes the production opportunities available to coalitions in the economy.

Suggested Citation

  • Suresh Mutuswami & Eyal Winter, 2002. "Efficient Mechanisms for Multiple Public Goods," Discussion Paper Series dp314, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    • Handle: RePEc:huj:dispap:dp314
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    References listed on IDEAS

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    1. Jackson, Matthew & Moulin, Hervé, 1992. "Implementing a public project and distributing its cost," Journal of Economic Theory, Elsevier, vol. 57(1), pages 125-140.
    2. Parkash Chander & Henry Tulkens, 2006. "The Core of an Economy with Multilateral Environmental Externalities," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 153-175, Springer.
    3. Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, vol. 56(5), pages 1191-1220, September.
    4. Mark Bagnoli & Barton L. Lipman, 1989. "Provision of Public Goods: Fully Implementing the Core through Private Contributions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(4), pages 583-601.
    5. Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, vol. 52(3), pages 309-328, October.
    6. Abreu, Dilip & Sen, Arunava, 1990. "Subgame perfect implementation: A necessary and almost sufficient condition," Journal of Economic Theory, Elsevier, vol. 50(2), pages 285-299, April.
    7. Bag, Parimal Kanti & Winter, Eyal, 1999. "Simple Subscription Mechanisms for Excludable Public Goods," Journal of Economic Theory, Elsevier, vol. 87(1), pages 72-94, July.
    8. Andreu Mas-Colell, 1980. "Efficiency and Decentralization in the Pure Theory of Public Goods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(4), pages 625-641.
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    Citations

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    Cited by:

    1. Lionel Richefort, 2018. "Warm-glow giving in networks with multiple public goods," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(4), pages 1211-1238, November.
    2. Garth Heutel, 2014. "Crowding Out and Crowding In of Private Donations and Government Grants," Public Finance Review, , vol. 42(2), pages 143-175, March.
    3. Jens Leth Hougaard & Mich Tvede, 2020. "Implementation of Optimal Connection Networks," IFRO Working Paper 2020/06, University of Copenhagen, Department of Food and Resource Economics.
    4. Mealem, Yosef, 2011. "Implementation of individually rational social choice functions with guaranteed utilities," Economics Letters, Elsevier, vol. 112(2), pages 165-167, August.
    5. Kundu, Rajendra P. & Pandey, Siddhigyan, 2021. "Multiple Public Goods In Networks," Working Papers 21/345, National Institute of Public Finance and Policy.
    6. Quigley, John & Walls, Lesley, 2007. "Trading reliability targets within a supply chain using Shapley's value," Reliability Engineering and System Safety, Elsevier, vol. 92(10), pages 1448-1457.
    7. Nava Kahana & Yosef Mealem & Shmuel Nitzan, 2009. "The Efficient and Fair Approval of “Multiple‐Cost‐Single‐Benefit” Projects under Unilateral Information," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(6), pages 947-960, December.
    8. Mealem, Yosef, 2010. "Efficient provision of a public project (almost) without knowing the cost-sharing rule," Economics Letters, Elsevier, vol. 107(2), pages 194-197, May.

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    More about this item

    Keywords

    public goods; mechanism design; Shapley value;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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