Optimal Provision of Multiple Excludable Public Goods / Hanming Fang, Peter Norman.

Format:

Book

Author/Creator:

Fang, Hanming.

Contributor:

National Bureau of Economic Research.

Norman, Peter.

Series:

Working Paper Series (National Bureau of Economic Research) no. w13797.

NBER working paper series no. w13797

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2008.

Summary:

This paper studies the optimal provision mechanism for multiple excludable public goods when agents' valuations are private information. For a parametric class of problems with binary valuations, we demonstrate that the optimal mechanism involves bundling if a regularity condition, akin to a hazard rate condition, on the distribution of valuations is satisfied. Bundling alleviates the free riding problem in large economies in two ways: first, it may increase the asymptotic provision probability of socially efficient public goods from zero to one; second, it decreases the extent of use exclusions. If the regularity condition is violated, then the optimal solution replicates the separate provision outcome.

Notes:

Print version record

February 2008.