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The Provision and Pricing of Excludable Public Goods: Ramsey-Boiteux Pricing versus Bundling

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  • Martin Hellwig

    ()
    (Max Planck Institute for Research on Collective Goods, Bonn)

Abstract

This paper studies the relation between Bayesian mechanism design and the Ramsey-Boiteux approach to the provision and pricing of excludable public goods. For a large economy with private information about individual preferences, the two approaches are shown to be equivalent if and only if, in addition to incentive compatibility and participation constraints, the .nal allocation of private-good consumption and admission tickets to public goods satis.es a condition of renegotiation proofness. Without this condition, a mechanism involving mixed bundling, i.e. combination tickets at a discount, is superior.

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File URL: http://www.coll.mpg.de/pdf_dat/2006_21online.pdf
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Bibliographic Info

Paper provided by Max Planck Institute for Research on Collective Goods in its series Working Paper Series of the Max Planck Institute for Research on Collective Goods with number 2006_21.

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Length: 49 pages
Date of creation: Sep 2006
Date of revision:
Handle: RePEc:mpg:wpaper:2006_21

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Keywords: Mechanism Design; Excludable Public Goods; Ramsey-Boiteux Pricing; Renegotiation Proofness; Bundling;

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References

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  1. Thanassoulis, John, 2004. "Haggling over substitutes," Journal of Economic Theory, Elsevier, vol. 117(2), pages 217-245, August.
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  6. Martin F. Hellwig, 2003. "Public-Good Provision with Many Participants," Review of Economic Studies, Oxford University Press, vol. 70(3), pages 589-614.
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  20. Rochet, Jean-Charles, 1987. "A necessary and sufficient condition for rationalizability in a quasi-linear context," Journal of Mathematical Economics, Elsevier, vol. 16(2), pages 191-200, April.
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  23. Peter Norman & Hanming Fang, 2004. "Public Provision of Private Goods," 2004 Meeting Papers 138, Society for Economic Dynamics.
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Cited by:
  1. Felix Bierbrauer, 2010. "An incomplete contracts perspective on the provision and pricing of excludable public goods," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2010_01, Max Planck Institute for Research on Collective Goods.
  2. James B. Davies & Al Slivinski, 2005. "The Public Role in Provision of Scientific Information: An Economic Approach," University of Western Ontario, Economic Policy Research Institute Working Papers 20051, University of Western Ontario, Economic Policy Research Institute.

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