An Efficiency Rationale for Bundling of Public Goods

Hanming Fang () and Peter Norman ()

Micro Theory Working Papers from Microeconomics.ca Website

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 characterize the optimal mechanism, and show that it involves bundling. Bundling alleviates the free riding problem in large economies in two ways: first, it can increase the asymptotic provision probability of socially efficient public goods from zero to one; second, it decreases the extent of use exclusions.

Keywords: Bundling; Public Good Provision; Exclusion (search for similar items in EconPapers)
JEL-codes: H41 (search for similar items in EconPapers)
Date: 2004-11-21, Revised 2005-02-08
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Related works:
Working Paper: An Efficiency Rational for Bundling of Public Goods (2004)
Working Paper: An efficiency rationale for bundling of public goods (2003)
Working Paper: An Efficiency Rationale for Bundling of Public Goods (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:ubc:pmicro:norman-04-11-21-09-39-13

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