An incomplete contracts perspective on the provision and pricing of excludable public goods
We study whether a firm that produces and sells access to an excludable public good should face a self-financing requirement, or, alternatively, receive subsidies that help to cover the cost of public-goods provision. The main result is that the desirability of a self-financing requirement is shaped by an equity-efficiency trade-off: While first-best efficiency is out of reach with such a requirement, its imposition limits the firm's ability of rent extraction. Hence, consumer surplus may be higher if the firm has no access to public funds.
|Date of creation:||Apr 2010|
|Date of revision:|
|Contact details of provider:|| Postal: Kurt-Schumacher-Str. 10 - D- 53113 Bonn|
Phone: +49-(0)228 / 91416-0
Fax: +49-(0)228 / 91416-55
Web page: http://www.coll.mpg.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, June.
- d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979.
"Incentives and incomplete information,"
Journal of Public Economics,
Elsevier, vol. 11(1), pages 25-45, February.
- Myerson, Roger B. & Satterthwaite, Mark A., 1983.
"Efficient mechanisms for bilateral trading,"
Journal of Economic Theory,
Elsevier, vol. 29(2), pages 265-281, April.
- Martimort, David & De Donder, Philippe & de Villemeur, Étienne, 2003.
"An Incomplete Contract Perspective on Public Good Provision,"
IDEI Working Papers
212, Institut d'Économie Industrielle (IDEI), Toulouse.
- David Martimort & Philippe De Donder & Etienne Billette de Villemeur, 2005. "An Incomplete Contract Perspective on Public Good Provision," Journal of Economic Surveys, Wiley Blackwell, vol. 19(2), pages 149-180, 04.
- Hellwig, Martin, 2004.
"The Provision and Pricing of Excludable Public Goods: Ramsey-Boiteux Pricing versus Bundling,"
Sonderforschungsbereich 504 Publications
04-02, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Hellwig, Martin F., 2007. "The provision and pricing of excludable public goods: Ramsey-Boiteux pricing versus bundling," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 511-540, April.
- Martin Hellwig, 2006. "The Provision and Pricing of Excludable Public Goods: Ramsey-Boiteux Pricing versus Bundling," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2006_21, Max Planck Institute for Research on Collective Goods.
- Bengt Holmstrom & Roger B. Myerson, 1981.
"Efficient and Durable Decision Rules with Incomplete Information,"
495, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Holmstrom, Bengt & Myerson, Roger B, 1983. "Efficient and Durable Decision Rules with Incomplete Information," Econometrica, Econometric Society, vol. 51(6), pages 1799-819, November.
- Loeb, Martin & Magat, Wesley A, 1979. "A Decentralized Method for Utility Regulation," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 399-404, October.
- Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
- 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.
- Norman,P., 2000. "Efficient mechanisms for public goods with use exclusions," Working papers 15, Wisconsin Madison - Social Systems.
- Schmitz, Patrick W, 1997.
"Monopolistic Provision of Excludable Public Goods under Private Information,"
Public Finance = Finances publiques,
, vol. 52(1), pages 89-101.
- Schmitz, Patrick W., 1997. "Monopolistic Provision of Excludable Public Goods under Private Information," MPRA Paper 6549, University Library of Munich, Germany.
- Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
- J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Oxford University Press, vol. 38(2), pages 175-208.
- Felix Bierbrauer, 2009. "On the Legitimacy of Coercion for the Financing of Public Goods," CESifo Working Paper Series 2663, CESifo Group Munich.
When requesting a correction, please mention this item's handle: RePEc:mpg:wpaper:2010_01. 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: (Marc Martin)
If references are entirely missing, you can add them using this form.