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Strategy-proof allocation of fixed costs

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  • James Dearden
  • Karl Einolf

Abstract

An economy can produce and consume a fixed-cost excludable public good only if its members fully fund the cost of the good. In this paper, we characterize the entire class of mechanisms for the provision of the public good and its cost that are Pareto optimal among the set of strategy-proof, voluntarily-participatory, budget-balancing, non-bossy, and replacement-monotonic mechanisms. We demonstrate that this class of mechanisms is quite small and can be characterized as simple step-price mechanisms. Copyright Springer-Verlag Berlin/Heidelberg 2003

Suggested Citation

  • James Dearden & Karl Einolf, 2003. "Strategy-proof allocation of fixed costs," Review of Economic Design, Springer;Society for Economic Design, vol. 8(2), pages 185-204, October.
    • Handle: RePEc:spr:reecde:v:8:y:2003:i:2:p:185-204
    DOI: 10.1007/s10058-003-0095-x
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    Cited by:

    1. Michael R. Galbreth & Bikram Ghosh & Mikhael Shor, 2012. "Social Sharing of Information Goods: Implications for Pricing and Profits," Marketing Science, INFORMS, vol. 31(4), pages 603-620, July.
    2. Hideki Mizukami & Takuma Wakayama, 2005. "Relationships between Non-Bossiness and Nash Implementability," Discussion Papers in Economics and Business 05-33, Osaka University, Graduate School of Economics.

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    Keywords

    Cost sharing; strategy-proofness;

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