Public goods, participation constraints, and democracy: A possibility theorem

Grüner, Hans Peter

No 7066, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: It is well known that ex post efficient mechanisms for the provision of indivisible public goods are not interim individually rational. However, the corresponding literature assumes that agents who veto a mechanism can enforce a situation in which the public good is never provided. This paper instead considers majority voting with uniform cost sharing as the relevant status quo. Efficient mechanisms may then exist, which also satisfy all agents' interim participation constraints. In this case, ex post inefficient voting mechanisms can be replaced by efficient ones without reducing any individual's expected utility. Intuitively, agents with a low willingness to pay have to contribute more under majority rule than under an efficient mechanism with a balanced budget. This possibility theorem is not universal in the sense of Schweizer (Games and Economic Behavior, 2005).

Keywords: Public goods; Ex post efficiency; Participation constraints; Majority voting; Possibility theorem (search for similar items in EconPapers)
JEL-codes: D02 D61 D71 H41 (search for similar items in EconPapers)
Date: 2008-12
New Economics Papers: this item is included in nep-cdm, nep-pbe, nep-pol and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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