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Public-Good Provision in a Large Economy

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  • Felix Bierbrauer

    (Max Planck Institute for Research on Collective Goods, Bonn)

  • Martin Hellwig

    (Max Planck Institute for Research on Collective Goods)

Abstract

We propose a new approach to the normative analysis of public-good provision in a large economy. Our analysis is based on a mechanism design approach that involves a requirement of coalition-proofness, as well as a requirement of robustness, so that the mechanism must not depend on specific assumptions about individual beliefs. Our main result shows that such a mechanism can condition only on the population shares of people with valuations above and below the per capita provision costs. This suggests an intriguing link between mechanism design for large economies and voting.

Suggested Citation

  • Felix Bierbrauer & Martin Hellwig, 2010. "Public-Good Provision in a Large Economy," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2010_02, Max Planck Institute for Research on Collective Goods.
    • Handle: RePEc:mpg:wpaper:2010_02
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    References listed on IDEAS

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    Cited by:

    1. Giebe, Thomas & Schweinzer, Paul, 2014. "Consuming your way to efficiency: Public goods provision through non-distortionary tax lotteries," European Journal of Political Economy, Elsevier, vol. 36(C), pages 1-12.
    2. Martin Hellwig, 2011. "Incomplete-Information Models of Large Economies with Anonymity: Existence and Uniqueness of Common Priors," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2011_08, Max Planck Institute for Research on Collective Goods.
    3. Grüner, Hans Peter, 2008. "Public goods, participation constraints, and democracy: A possibility theorem," CEPR Discussion Papers 7066, C.E.P.R. Discussion Papers.
    4. Felix Bierbrauer & Martin Hellwig, 2011. "Mechanism Design and Voting for Public-Good Provision," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2011_31, Max Planck Institute for Research on Collective Goods.
    5. Felix J. Bierbrauer & Martin F. Hellwig, 2015. "Public-Good Provision in Large Economies," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2015_12, Max Planck Institute for Research on Collective Goods.

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    More about this item

    Keywords

    Large Economy; Mechanism Design; Public-good provision;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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