IDEAS home Printed from https://ideas.repec.org/p/cor/louvrp/2184.html
   My bibliography  Save this paper

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

Author

Listed:
  • MANIQUET, François
  • SPRUMONT, Yves

Abstract

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, we give an explicit characterization of all incentive-constrained efficient allocation rules. We then show that 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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • MANIQUET, François & SPRUMONT, Yves, 2010. "Sharing the cost of a public good: An incentive-constrained axiomatic approach," LIDAM Reprints CORE 2184, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2184
    DOI: 10.1016/j.geb.2009.04.024
    Note: In : Games and Economic Behavior, 68, 275-302, 2010
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1016/j.geb.2009.04.024
    Download Restriction: no
    File URL: https://libkey.io/10.1016/j.geb.2009.04.024?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, vol. 49(1), pages 65-71, January.
    3. 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 1589-1594, October.
    4. 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 427-438, March.
    5. Erik Lindahl, 1958. "Some Controversial Questions in the Theory of Taxation," International Economic Association Series, in: Richard A. Musgrave & Alan T. Peacock (ed.), Classics in the Theory of Public Finance, pages 214-232, Palgrave Macmillan.
    6. Hellwig, Martin F., 2005. "A utilitarian approach to the provision and pricing of excludable public goods," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 1981-2003, December.
    7. Moulin, Herve, 1987. "Egalitarian-Equivalent Cost Sharing of a Public Good," Econometrica, Econometric Society, vol. 55(4), pages 963-976, July.
    8. François Maniquet & Yves Sprumont, 2004. "Fair Production and Allocation of an Excludable Nonrival Good," Econometrica, Econometric Society, vol. 72(2), pages 627-640, March.
    9. James A. Dearden, 1998. "Serial cost sharing of excludable public goods: general cost functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 12(1), pages 189-198.
    10. Maniquet, Francois & Sprumont, Yves, 2005. "Welfare egalitarianism in non-rival environments," Journal of Economic Theory, Elsevier, vol. 120(2), pages 155-174, February.
    11. William Thomson, 1983. "The Fair Division of a Fixed Supply Among a Growing Population," Mathematics of Operations Research, INFORMS, vol. 8(3), pages 319-326, August.
    12. William Thomson, 2007. "Fair Allocation Rules," RCER Working Papers 539, University of Rochester - Center for Economic Research (RCER).
    13. Demange, Gabrielle, 1984. "Implementing Efficient Egalitarian Equivalent Allocations," Econometrica, Econometric Society, vol. 52(5), pages 1167-1177, September.
    14. Norman,P., 2000. "Efficient mechanisms for public goods with use exclusions," Working papers 15, Wisconsin Madison - Social Systems.
    15. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    16. Dreze, Jacques H., 1980. "Public goods with exclusion," Journal of Public Economics, Elsevier, vol. 13(1), pages 5-24, February.
    17. Diamond, Peter A, 1998. "Optimal Income Taxation: An Example with a U-Shaped Pattern of Optimal Marginal Tax Rates," American Economic Review, American Economic Association, vol. 88(1), pages 83-95, March.
    18. Deb, Rajat & Ghosh, Indranil K. & Seo, Tae Kun, 2002. "Welfare asymptotics of the pivotal mechanism for excludable public goods," Mathematical Social Sciences, Elsevier, vol. 43(2), pages 209-224, March.
    19. L. Hurwicz, 1979. "Outcome Functions Yielding Walrasian and Lindahl Allocations at Nash Equilibrium Points," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(2), pages 217-225.
    20. Crawford, Vincent P, 1979. "A Procedure for Generating Pareto-Efficient Egalitarian-Equivalent Allocations," Econometrica, Econometric Society, vol. 47(1), pages 49-60, January.
    21. François Maniquet, 2003. "Implementation of allocation rules under perfect information," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 21(2), pages 323-346, October.
    22. Kaneko, Mamoru, 1977. "The ratio equilibrium and a voting game in a public goods economy," Journal of Economic Theory, Elsevier, vol. 16(2), pages 123-136, December.
    23. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(2), pages 175-208.
    24. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
    25. Peter Norman, 2004. "Efficient Mechanisms for Public Goods with Use Exclusions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(4), pages 1163-1188.
    26. 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.
    27. 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.
    28. Yves Sprumont, 1998. "Equal factor equivalence in economies with multiple public goods," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 15(4), pages 543-558.
    29. Hervé Moulin, 1994. "Serial Cost-Sharing of Excludable Public Goods," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(2), pages 305-325.
    30. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
    31. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    32. Andreu Mas-Colell, 1980. "Efficiency and Decentralization in the Pure Theory of Public Goods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(4), pages 625-641.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Moreno-Ternero, Juan D. & Roemer, John E., 2012. "A common ground for resource and welfare egalitarianism," Games and Economic Behavior, Elsevier, vol. 75(2), pages 832-841.
    2. Nicolas Gravel & Michel Poitevin, 2014. "Should a Non-Rival Public Good Always Be Provided Centrally?," Working Papers halshs-01063191, HAL.
    3. Athanasiou, Efthymios, 2013. "A Solomonic solution to the problem of assigning a private indivisible good," Games and Economic Behavior, Elsevier, vol. 82(C), pages 369-387.
    4. Geoffroy de Clippel, 2010. "Copmment on Egalitarianism under Incomplete Information," Working Papers 2010-4, Brown University, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Monique Florenzano, 2010. "Government and the provision of public goods:from equilibrium models to mechanismdesign," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 17(4), pages 1047-1077.
    2. Maskin, Eric & Sjostrom, Tomas, 2002. "Implementation theory," Handbook of Social Choice and Welfare,in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 1, chapter 5, pages 237-288 Elsevier.
    3. Monique Florenzano, 2009. "From equilibrium models to mechanism design: On the place and the role of government in the public goods provision analysis in the second part of the twentieth century," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00367859, HAL.
    4. Thomson, William, 2011. "Chapter Twenty-One - Fair Allocation Rules," Handbook of Social Choice and Welfare, in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 2, chapter 21, pages 393-506, Elsevier.
    5. Corchón, Luis C., 2008. "The theory of implementation : what did we learn?," UC3M Working papers. Economics we081207, Universidad Carlos III de Madrid. Departamento de Economía.
    6. Clark Robinson & Gerry Suchanek, 1985. "On the design of optimal mechanisms for the Arrow-Hahn-McKenzie economy," Public Choice, Springer, vol. 47(2), pages 313-335, January.
    7. Ledyard, John O., "undated". "Public Goods: A Survey of Experimental Research," Working Papers 861, California Institute of Technology, Division of the Humanities and Social Sciences.
    8. Tian, Guoqiang, 1997. "Virtual implementation in incomplete information environments with infinite alternatives and types," Journal of Mathematical Economics, Elsevier, vol. 28(3), pages 313-339, October.
    9. Bierbrauer, Felix & Netzer, Nick, 2016. "Mechanism design and intentions," Journal of Economic Theory, Elsevier, vol. 163(C), pages 557-603.
    10. Hellwig, Martin F., 2005. "A utilitarian approach to the provision and pricing of excludable public goods," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 1981-2003, December.
    11. Felix Bierbrauer & Marco Sahm, 2008. "Optimal Democratic Mechanisms for Taxation and Public Good Provision," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2008_09, Max Planck Institute for Research on Collective Goods.
    12. Sertel, Murat R. & Sanver, M. Remzi, 1999. "Equilibrium outcomes of Lindahl-endowment pretension games1," European Journal of Political Economy, Elsevier, vol. 15(2), pages 149-162, June.
    13. Rajat Deb & Tae Seo, 2010. "Strategy-proofness and public good provision using referenda based on unequal cost sharing," International Journal of Game Theory, Springer;Game Theory Society, vol. 39(1), pages 223-236, March.
    14. Felix Bierbrauer, 2008. "A unified approach to the revelation of public goods preferences and to optimal income taxation," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2008_39, Max Planck Institute for Research on Collective Goods.
    15. James Schummer, 1999. "Almost-dominant Strategy Implementation," Discussion Papers 1278, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    16. Martin Hellwig & Felix Bierbrauer, 2009. "Public Good Provision in a Large Economy," 2009 Meeting Papers 1062, Society for Economic Dynamics.
    17. Deb, Rajat & Razzolini, Laura & Seo, Tae Kun, 2003. "Strategy-proof cost sharing, ability to pay and free provision of an indivisible public good," Mathematical Social Sciences, Elsevier, vol. 45(2), pages 205-227, April.
    18. Luis V. M. Freitas & Wilfredo L. Maldonado, 2021. "Quadratic Funding with Incomplete Information," Working Papers, Department of Economics 2021_24, University of São Paulo (FEA-USP).
    19. John Duggan & Joanne Roberts, 2002. "Implementing the Efficient Allocation of Pollution," American Economic Review, American Economic Association, vol. 92(4), pages 1070-1078, September.
    20. Duygu Yengin, 2012. "Egalitarian-equivalent Groves mechanisms in the allocation of heterogenous objects," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 38(1), pages 137-160, January.

    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cor:louvrp:2184. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alain GILLIS (email available below). General contact details of provider: https://edirc.repec.org/data/coreebe.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.