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Public-Good Provision with Many Participants

  • Martin F. Hellwig

For a nonexcludable public good with benefit and cost functions independent of the number of participants, this paper studies second-best allocations under Bayesian interim incentive compatibility and interim individual rationality. As the number of participants becomes large, second-best provision levels converge in distribution to first-best levels if the latter are bounded. Second-best provision levels become large in absolute terms but small relative to first-best levels if benefit and cost functions are isoelastic. In contrast, for an excludable public good, the ratio of second-best to first-best levels is bounded away from zero. Copyright 2003, Wiley-Blackwell.

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File URL: http://hdl.handle.net/10.1111/1467-937X.00257
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Article provided by Oxford University Press in its journal The Review of Economic Studies.

Volume (Year): 70 (2003)
Issue (Month): 3 ()
Pages: 589-614

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Handle: RePEc:oup:restud:v:70:y:2003:i:3:p:589-614
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  1. John O. Ledyard & Thomas R. Palfrey, 1994. "Voting and Lottery Drafts as Efficient Public Goods Mechanisms," Review of Economic Studies, Oxford University Press, vol. 61(2), pages 327-355.
  2. Hellwig, Martin, 2001. "The Impact of the Number of Participants on the Provision of a Public Good," Papers 01-16, Sonderforschungsbreich 504.
  3. Werner Güth & Martin Hellwig, 1986. "The private supply of a public good," Journal of Economics, Springer, vol. 46(1), pages 121-159, December.
  4. d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979. "Incentives and incomplete information," Journal of Public Economics, Elsevier, vol. 11(1), pages 25-45, February.
  5. Rob, R., 1988. "Pollution Claim Settlements Under Private Information," Papers 19-88, Tel Aviv.
  6. Zvika Neeman, 1999. "Property Rights and Efficiency of Voluntary Bargaining under Asymmetric Information," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 679-691.
  7. Roberts, John, 1976. "The incentives for correct revelation of preferences and the number of consumers," Journal of Public Economics, Elsevier, vol. 6(4), pages 359-374, November.
  8. Schmitz, Patrick W., 1997. "Monopolistic Provision of Excludable Public Goods under Private Information," MPRA Paper 6549, University Library of Munich, Germany.
  9. Norman,P., 2000. "Efficient mechanisms for public goods with use exclusions," Working papers 15, Wisconsin Madison - Social Systems.
  10. John O. Ledyard & Thomas R. Palfrey, 1999. "A Characterization of Interim Efficiency with Public Goods," Econometrica, Econometric Society, vol. 67(2), pages 435-448, March.
  11. Peter Cramton & Robert Gibbons & Paul Klemperer, 1987. "Dissolving a Partnership Efficiently," Papers of Peter Cramton 87econ, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
  12. Al-Najjar, Nabil I. & Smorodinsky, Rann, 2000. "Pivotal Players and the Characterization of Influence," Journal of Economic Theory, Elsevier, vol. 92(2), pages 318-342, June.
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