Monopolistic Provision of Excludable Public Goods under Private Information
AbstractThis paper characterizes the optimal contract designed by a profit-maximizing monopolist, who can provide an indivisible and excludable public good to a group of n potential consumers, whose valuations are private information. The analysis takes distribution costs and congestion effects into account. The second-best allocation rule, which is welfare-maximizing under the constraint of non-negative profits, is characterized. Properties of the optimal mechanism in the case of many potential consumers are analyzed and it is shown that in this case the monopolist can use simple posted-price contracts. Finally, implications for public intervention are discussed.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 6549.
Date of creation: 1997
Date of revision:
Publication status: Published in Public Finance/Finances Publiques 52.1(1997): pp. 89-101
Other versions of this item:
- Schmitz, Patrick W, 1997. "Monopolistic Provision of Excludable Public Goods under Private Information," Public Finance = Finances publiques, , vol. 52(1), pages 89-101.
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
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- Auster, Richard D, 1977. "Private Markets in Public Goods (or Qualities)," The Quarterly Journal of Economics, MIT Press, vol. 91(3), pages 419-30, August.
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- Cairns, Robert D., 1993. "The optimal auction : A mechanism for optimal third-degree price discrimination," Journal of Economic Behavior & Organization, Elsevier, vol. 20(2), pages 213-225, February.
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Discussion Paper Serie A
40, University of Bonn, Germany.
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