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Monopolistic Provision of Excludable Public Goods under Private Information

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Author Info
Schmitz, Patrick W.

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Abstract

This 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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File URL: http://mpra.ub.uni-muenchen.de/6549/
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6549.

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Date of creation: 1997
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Publication status: Published in Public Finance/Finances Publiques 52.1(1997): pp. 89-101
Handle: RePEc:pra:mprapa:6549

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Find related papers by JEL classification:
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Gueth,Werner & Hellwig,Martin, 1986. "The private supply of a public good," Discussion Paper Serie A 40, University of Bonn, Germany.
    Other versions:
  2. Schmidt, Klaus M, 1996. "The Costs and Benefits of Privatization: An Incomplete Contracts Approach," Journal of Law, Economics and Organization, Oxford University Press, vol. 12(1), pages 1-24, April.
  3. Tirole, Jean, 1994. "The Internal Organization of Government," Oxford Economic Papers, Oxford University Press, vol. 46(1), pages 1-29, January. [Downloadable!] (restricted)
    Other versions:
  4. 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. [Downloadable!] (restricted)
  5. Mailath, George J & Postlewaite, Andrew, 1990. "Asymmetric Information Bargaining Problems with Many Agents," Review of Economic Studies, Blackwell Publishing, vol. 57(3), pages 351-67, July. [Downloadable!] (restricted)
  6. Shapiro, C. & Willing, D.R., 1990. "Economic Rationales For The Scope Of Privatization," Papers 41, Princeton, Woodrow Wilson School - Discussion Paper.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hellwig, Martin, 2004. "Optimal Income Taxation, Public-Goods Provision," Sonderforschungsbereich 504 Publications 04-42, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim. [Downloadable!]
  2. Martin Hellwig, 2009. "Utilitarian Mechanism Design for an Excludable Public Good," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2009_12, Max Planck Institute for Research on Collective Goods. [Downloadable!]
  3. Martin Hellwig, 2006. "The Provision and Pricing of Excludable Public Goods: Ramsey-Boiteux Pricing versus Bundling," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2006_21, Max Planck Institute for Research on Collective Goods. [Downloadable!]
    Other versions:
  4. Hanming Fang & Peter Norman, 2008. "Toward an Efficiency Rationale for the Public Provision of Private Goods," NBER Working Papers 13827, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Schmitz, Patrick W., 2002. "Monopolistic Licensing Strategies under Asymmetric Information," MPRA Paper 12532, University Library of Munich, Germany. [Downloadable!]
  6. Martin Hellwig, 2004. "Optimal Income Taxation, Public-Goods Provision and Public-Sector Pricing: A Contribution to the Foundations of Public Economics," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2004_14, Max Planck Institute for Research on Collective Goods. [Downloadable!]
  7. Hellwig, Martin, 2003. "A Utilitarian Approach to the Provision and Pricing of Excludable Public Goods," Sonderforschungsbereich 504 Publications 03-36, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim. [Downloadable!]
    Other versions:
  8. Felix Bierbrauer, 2009. "On the legitimacy of coercion for the financing of public goods," Discussion Papers 265, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  9. Bernd Huber & Marco Runkel, 2004. "Tax Competition, Excludable Public Goods and User Charges," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  10. Felix Bierbrauer, 2009. "On the Legitimacy of Coercion for the Financing of Public Goods," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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