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Sharing the cost of a public good: An incentive-constrained axiomatic approach

  • MANIQUET, François
  • SPRUMONT, Yves

We study the problem of provision and cost-sharing of a public good in large economies where exclusion, complete or partial, is possible. We search for incentive-constrained efficient allocation rules that display fairness properties. Population monotonicity says that an increase in population should not be detrimental to anyone. Demand monotonicity states that an increase in the demand for the public good (in the sense of a first-order stochastic dominance shift in the distribution of preferences) should not be detrimental to any agent whose preferences remain unchanged. Under suitable domain restrictions, there exists a unique incentive-constrained efficient and demand-monotonic allocation rule: the so-called serial rule. In the binary public good case, the serial rule is also the only incentive-constrained efficient and population-monotonic rule.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number -2184.

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Handle: RePEc:cor:louvrp:-2184
Note: In : Games and Economic Behavior, 68, 275-302, 2010
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  1. Francois Maniquet & Yves Sprumont, 2002. "Fair Production and Allocation of an Excludable Nonrival Good," Economics Working Papers 0014, Institute for Advanced Study, School of Social Science.
  2. James A. Dearden, 1998. "Serial cost sharing of excludable public goods: general cost functions," Economic Theory, Springer, vol. 12(1), pages 189-198.
  3. Sprumont, Y., 1996. "Equal Factor Equivalence in Economies with Multiple Public Goods," Cahiers de recherche 9627, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  4. Hellwig, Martin, 2003. "A Utilitarian Approach to the Provision and Pricing of Excludable Public Goods," Sonderforschungsbereich 504 Publications 03-36, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  5. DREZE, Jacques H., . "Public goods with exclusion," CORE Discussion Papers RP -396, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Crawford, Vincent P, 1979. "A Procedure for Generating Pareto-Efficient Egalitarian-Equivalent Allocations," Econometrica, Econometric Society, vol. 47(1), pages 49-60, January.
  7. Peter Norman, 2004. "Efficient Mechanisms for Public Goods with Use Exclusions," Review of Economic Studies, Wiley Blackwell, vol. 71(4), pages 1163-1188, October.
  8. Green, Jerry & Laffont, Jean-Jacques, 1977. "Characterization of Satisfactory Mechanisms for the Revelation of Preferences for Public Goods," Econometrica, Econometric Society, vol. 45(2), pages 427-38, March.
  9. Groves, Theodore & Ledyard, John O, 1977. "Optimal Allocation of Public Goods: A Solution to the "Free Rider" Problem," Econometrica, Econometric Society, vol. 45(4), pages 783-809, May.
  10. Francois Maniquet & Yves Sprumont, 2002. "Welfare Egalitarianism in Non-Rival Environments," Economics Working Papers 0016, Institute for Advanced Study, School of Social Science.
  11. Hurwicz, L, 1979. "Outcome Functions Yielding Walrasian and Lindahl Allocations at Nash Equilibrium Points," Review of Economic Studies, Wiley Blackwell, vol. 46(2), pages 217-25, April.
  12. François Maniquet, 2003. "Implementation of allocation rules under perfect information," Social Choice and Welfare, Springer, vol. 21(2), pages 323-346, October.
  13. repec:cup:cbooks:9780521887427 is not listed on IDEAS
  14. Olszewski, Wojciech, 2004. "Coalition strategy-proof mechanisms for provision of excludable public goods," Games and Economic Behavior, Elsevier, vol. 46(1), pages 88-114, January.
  15. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
  16. Kaneko, Mamoru, 1977. "The Ratio Equilibria and the Core of the Voting Game G(N, W) in a Public Goods Economy," Econometrica, Econometric Society, vol. 45(7), pages 1589-94, October.
  17. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
  18. Mutuswami, Suresh, 2004. "Strategyproof cost sharing of a binary good and the egalitarian solution," Mathematical Social Sciences, Elsevier, vol. 48(3), pages 271-280, November.
  19. Mas-Colell, Andreu, 1980. "Efficiency and Decentralization in the Pure Theory of Public Goods," The Quarterly Journal of Economics, MIT Press, vol. 94(4), pages 625-41, June.
  20. Demange, Gabrielle, 1984. "Implementing Efficient Egalitarian Equivalent Allocations," Econometrica, Econometric Society, vol. 52(5), pages 1167-77, September.
  21. Moulin, Herve, 1994. "Serial Cost-Sharing of Excludable Public Goods," Review of Economic Studies, Wiley Blackwell, vol. 61(2), pages 305-25, April.
  22. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July.
  23. Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, vol. 49(1), pages 65-71, January.
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