IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/6549.html
   My bibliography  Save this paper

Monopolistic Provision of Excludable Public Goods under Private Information

Author

Listed:
  • Schmitz, Patrick W.

Abstract

This paper characterizes the optimal contract designed by a profit-maximizing monopolist, who can provide an indivisible and excludable public good to a group of n potential consumers, whose valuations are private information. The analysis takes distribution costs and congestion effects into account. The second-best allocation rule, which is welfare-maximizing under the constraint of non-negative profits, is characterized. Properties of the optimal mechanism in the case of many potential consumers are analyzed and it is shown that in this case the monopolist can use simple posted-price contracts. Finally, implications for public intervention are discussed.

Suggested Citation

  • Schmitz, Patrick W., 1997. "Monopolistic Provision of Excludable Public Goods under Private Information," MPRA Paper 6549, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:6549
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/6549/1/MPRA_paper_6549.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Schmidt, Klaus M., 1996. "Incomplete contracts and privatization," European Economic Review, Elsevier, vol. 40(3-5), pages 569-579, April.
    2. Schmidt, Klaus M, 1996. "The Costs and Benefits of Privatization: An Incomplete Contracts Approach," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 12(1), pages 1-24, April.
    3. George J. Mailath & Andrew Postlewaite, 1990. "Asymmetric Information Bargaining Problems with Many Agents," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(3), pages 351-367.
    4. Bigman, David, 1992. "Unanimity and exclusion as mechanisms to eliminate free riding in public goods : Diagrammatical illustrations," Journal of Economic Behavior & Organization, Elsevier, vol. 19(1), pages 101-117, September.
    5. Cairns, Robert D., 1993. "The optimal auction : A mechanism for optimal third-degree price discrimination," Journal of Economic Behavior & Organization, Elsevier, vol. 20(2), pages 213-225, February.
    6. Shapiro, C. & Willing, D.R., 1990. "Economic Rationales For The Scope Of Privatization," Papers 41, Princeton, Woodrow Wilson School - Discussion Paper.
    7. Tirole, Jean, 1994. "The Internal Organization of Government," Oxford Economic Papers, Oxford University Press, vol. 46(1), pages 1-29, January.
    8. Richard D. Auster, 1977. "Private Markets in Public Goods (or Qualities)," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 91(3), pages 419-430.
    9. Chae, Suchan, 1992. "Bundling subscription TV channels : A case of natural bundling," International Journal of Industrial Organization, Elsevier, vol. 10(2), pages 213-230, June.
    Full references (including those not matched with items on IDEAS)

    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. Lulfesmann, Christoph, 2007. "On the virtues of privatization when government is benevolent," Journal of Economic Behavior & Organization, Elsevier, vol. 64(1), pages 17-34, September.
    2. 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, April.
    3. repec:eee:labchp:v:3:y:1999:i:pc:p:3573-3630 is not listed on IDEAS
    4. Robert Gibbons & John Roberts, 2012. "The Handbook of Organizational Economics," Economics Books, Princeton University Press, edition 1, volume 1, number 9889.
    5. Shibata, Takashi & Nishihara, Michi, 2011. "Interactions between investment timing and management effort under asymmetric information: Costs and benefits of privatized firms," European Journal of Operational Research, Elsevier, vol. 215(3), pages 688-696, December.
    6. Emmanuelle Auriol & Pierre M. Picard, 2009. "Government Outsourcing: Public Contracting with Private Monopoly," Economic Journal, Royal Economic Society, vol. 119(540), pages 1464-1493, October.
    7. Siegmund, Uwe, 1996. "Are there nationalization-privatization cycles? A theoretical survey and first empirical evidence," Kiel Working Papers 757, Kiel Institute for the World Economy (IfW Kiel).
    8. Lahmandi-Ayed, Rim & Laussel, Didier, 2022. "When do privatizations have popular support? A voting model," Journal of Mathematical Economics, Elsevier, vol. 100(C).
    9. Emmanuelle Auriol & Pierre M. Picard, 2008. "Infrastructure and Public Utilities Privatization in Developing Countries," The World Bank Economic Review, World Bank, vol. 23(1), pages 77-100, November.
    10. Mühlenkamp, Holger, 2013. "From state to market revisited: more empirical evidence on the efficiency of public (and privately-owned) enterprises," MPRA Paper 47570, University Library of Munich, Germany.
    11. Ilya Segal & Michael D.Whinston, 2012. "Property Rights [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    12. Ao, Chon-Kit, 2021. "Privatization of water supply and human capital accumulation," Economics of Education Review, Elsevier, vol. 83(C).
    13. AURIOL, Emmanuelle & PICARD, Pierre, 2004. "Liberal regulation : privatization of natural monopolies with adverse selection," LIDAM Discussion Papers CORE 2004013, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    14. Villalonga, Belen, 2000. "Privatization and efficiency: differentiating ownership effects from political, organizational, and dynamic effects," Journal of Economic Behavior & Organization, Elsevier, vol. 42(1), pages 43-74, May.
    15. Eva I. Hoppe & Patrick W. Schmitz, 2013. "Public-private partnerships versus traditional procurement: Innovation incentives and information gathering," RAND Journal of Economics, RAND Corporation, vol. 44(1), pages 56-74, March.
    16. Dyck, I. J. Alexander & Wruck, Karen Hopper, 1998. "Organization structure, contract design and government ownership: A clinical analysis of German privatization1," Journal of Corporate Finance, Elsevier, vol. 4(3), pages 265-299, September.
    17. Patrick W. Schmitz, 2001. "Partial Privatization and Incomplete Contracts: The Proper Scope of Government Reconsidered," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(4), pages 394-411, August.
    18. Filippo Belloc, 2014. "Innovation in State-Owned Enterprises: Reconsidering the Conventional Wisdom," Journal of Economic Issues, Taylor & Francis Journals, vol. 48(3), pages 821-848.
    19. Auriol, Emmanuelle & Blanc, Aymeric, 2009. "Capture and corruption in public utilities: The cases of water and electricity in Sub-Saharan Africa," Utilities Policy, Elsevier, vol. 17(2), pages 203-216, June.
    20. Rim Lahmandi-Ayed & Didier Laussel, 2020. "A voting model of privatization," Working Papers hal-02504990, HAL.
    21. Hoppe, Eva I. & Schmitz, Patrick W., 2010. "Public versus private ownership: Quantity contracts and the allocation of investment tasks," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 258-268, April.

    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

    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:pra:mprapa:6549. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.