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

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  • Hellwig, Martin

    ()
    (Sonderforschungsbereich 504)

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 contraints, the final allocation of private-good consumption and admission tickets to public goods satisfies 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.sfb504.uni-mannheim.de/publications/dp04-02.pdf
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Bibliographic Info

Paper provided by Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim in its series Sonderforschungsbereich 504 Publications with number 04-02.

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Length: 31 pages
Date of creation: 03 Feb 2004
Date of revision:
Handle: RePEc:xrs:sfbmaa:04-02

Note: Without implicating them, I thank Felix Bierbrauer, Christian Hellwig, and Peter Norman for helpful discussions. I am also grateful for research support from the Deutsche Forschungsgemeinschaft through Sonderforschungsbereich 504 at the University of Mannheim.
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Cited by:
  1. Hanming Fang & Peter Norman, 2014. "Toward an efficiency rationale for the public provision of private goods," Economic Theory, Springer, Springer, vol. 56(2), pages 375-408, June.
  2. 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.
  3. 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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