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Profit-Maximizing Sale of a Discrete Public Good via the Subscription Game in Private-Information Environments

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  • Barbieri Stefano

    (Tulane University)

  • Malueg David A.

    (University of California - Riverside)

Abstract

We analyze a symmetric Bayesian game in which two players individually contribute to fund a discrete public good; contributions are refunded if they do not reach a threshold set by the seller of the good. We characterize the distributions of players' private values that can support a symmetric equilibrium in continuous piecewise-linear strategies, and we calculate these strategies. Allowing the seller to charge an entry fee before players make their private contributions, we show these piecewise-linear equilibrium strategies maximize the seller's expected profit over all incentive compatible selling mechanisms.

Suggested Citation

  • Barbieri Stefano & Malueg David A., 2010. "Profit-Maximizing Sale of a Discrete Public Good via the Subscription Game in Private-Information Environments," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-31, February.
  • Handle: RePEc:bpj:bejtec:v:10:y:2010:i:1:n:5
    DOI: 10.2202/1935-1704.1575
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    14. Stefano Barbieri & David A. Malueg, 2008. "Private Provision of a Discrete Public Good: Continuous‐Strategy Equilibria in the Private‐Information Subscription Game," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(4), pages 529-545, August.
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    Cited by:

    1. Li, Zhi & Anderson, Christopher M. & Swallow, Stephen, 2012. "Uniform Price Mechanisms for Threshold Public Goods Provision: An Experimental Investigation," Working Paper series 148349, University of Connecticut, Charles J. Zwick Center for Food and Resource Policy.
    2. Altınok, Ahmet & Yılmaz, Murat, 2018. "Dynamic voluntary contribution to a public project under time inconsistency," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 114-140.
    3. Roland Strausz, 2017. "A Theory of Crowdfunding: A Mechanism Design Approach with Demand Uncertainty and Moral Hazard," American Economic Review, American Economic Association, vol. 107(6), pages 1430-1476, June.
    4. Matthew Ellman & Sjaak Hurkens, 2014. "Optimal Crowdfunding Design," Working Papers 14-21, NET Institute.
    5. Li, Zhi & Anderson, Christopher M. & Swallow, Stephen K., 2016. "Uniform price mechanisms for threshold public goods provision with complete information: An experimental investigation," Journal of Public Economics, Elsevier, vol. 144(C), pages 14-26.
    6. Zhi Li & Christopher Anderson & Stephen K. Swallow, 2012. "Uniform Price Mechanisms for Threshold Public Goods Provision: An Experimental Investigation," Working Papers 14, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    7. Murat Yilmaz, 2010. "Auctioning a Discrete Public Good under Incomplete Information," Working Papers 2010/14, Bogazici University, Department of Economics.
    8. Ellman, Matthew & Hurkens, Sjaak, 2019. "Optimal crowdfunding design," Journal of Economic Theory, Elsevier, vol. 184(C).

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