Public-Good Provision in Large Economies

Felix J. Bierbrauer () and Martin Hellwig
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Felix J. Bierbrauer: University of Cologne, Chair for Public Economics CMR – Center for Macroeconomic Research

No 2015_12, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: In a large economy, a first-best provison rule for a public good is robustly implementable with budget balance because no one individual alone can affect the aggregate outcome. First-best outcomes can, however, be blocked by coalitions of agents acting in concert. With a requirement of immunity against robustly blocking coalitions, we find that, for a pubic good that come as a single indivisible unit, a monotonic social choice function cannot condition on preference intensities but only on the population shares of people favoring one outcome over another. Any such social choice function can be implemented by a simple voting mechanism. With more public-good provision levels, more complicated mechanisms are required, but they still involve the counting of votes rather than an assessment of benefits. Monotonicity and immunity against robust blocking thus provide a foundation for the use of voting mechanisms.

Keywords: Mechanism Design; Public-good provision; Large Economy; Voting Mechanisms; Robust Incentive Compatibility; Immunity against Robustly Blocking Coalitions; Monotonic Social Choice Functions (search for similar items in EconPapers)
JEL-codes: D60 D70 D82 H41 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-cdm, nep-gth, nep-mic, nep-pol and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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