Sharing the Cost of a Public Good: an Incentive-Constrained Axiomatic Approach

Yves SPRUMONT and Francois Paul Maniquet ()

Cahiers de recherche from Universite de Montreal, Departement de sciences economiques

Abstract: We study the problem of provision and cost-sharing of a public good in large economies where exclusion, complete or partial, is possible. We search for incentive-constrained efficient allocation rules that display fairness properties. Population monotonicity says that an increase in population should not be detrimental to anyone. Demand monotonicity states that an increase in the demand for the public good (in the sense of a first-order stochastic dominance shift in the distribution of preferences) should not be detrimental to any agent whose preferences remain unchanged. Under suitable domain restrictions, there exists a unique incentive-constrained efficient and demand-monotonic allocation rule: the so-called serial rule. In the binary public good case, the serial rule is also the only incentive-constrained efficient and population-monotonic rule.

Keywords: excludable blic good; incentive comtibility; fairness; serial rule (search for similar items in EconPapers)
JEL-codes: D63 D71 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe and nep-pbe
Date: Written 2006
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