Optimal Provision of Multiple Excludable Public Goods

Hanming Fang () and Peter Norman ()

No 13797, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: H41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-pub
Date: 2008-02
Note: PE
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Related works:
Working Paper: Optimal Provision of Multiple Excludable Public Goods (2006)
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