IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Provision of Public Goods: Fully Implementing the Core through Private Contributions

Listed author(s):
  • Mark Bagnoli
  • Barton L. Lipman

Standard economic intuition would say that private provision of public goods will be inefficient due to free-rider problems. This view is in contrast to the results in the literature on full implementation where it is shown that (under certain conditions) games exist which only have efficient equilibria. The games usually used to demonstrate existence are quite complex and seem "unnatural" possibly leading to the perception that implementation requires a central authority to choose and impose the game. In a simple public goods setting, we show that a very natural game—similar to one often used elsewhere in the literature to model private provision—in fact fully implements the core of this economy in undominated perfect equilibria. More specifically, we consider a complete information economy with one private good and two possible social decisions. Agents voluntarily contribute any non-negative amount of the private good they choose and the social decision is to provide the public good iff contributions are sufficient to pay for it. The contributions are refunded otherwise. The set of undominated perfect equilibrium outcomes of this game is exactly the core of the economy. We give some extensions of this result, discuss the role of perfection and alternative equilibrium notions, and discuss the intuition and implications of the results.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://hdl.handle.net/10.2307/2297502
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Oxford University Press in its journal The Review of Economic Studies.

Volume (Year): 56 (1989)
Issue (Month): 4 ()
Pages: 583-601

as
in new window

Handle: RePEc:oup:restud:v:56:y:1989:i:4:p:583-601.
Contact details of provider:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:oup:restud:v:56:y:1989:i:4:p:583-601.. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)

or (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.