 Private Provisions of a Discrete Public Good with Voluntary ParticipationJingfeng Lu and Euston Quah Journal of Public Economic Theory, 2009, vol. 11, issue 3, 343-362 Abstract: This paper studies the mechanism that a profit‐making principal should adopt to provide a discrete public good when the values of the consumers are their private information and their participation is voluntary. The free‐riding issue is resolved through threatened nonprovision of the good by the provider. Every bidder is asked to announce his or her virtual value as defined in Myerson (1981). The public good is provided if and only if the sum of the bidders' announced virtual values exceeds the provision cost. When a provision decision results, each bidder pays an amount that is determined by the announcement of other consumers. No one pays when a nonprovision decision results. We find that this mechanism is implementable through an all‐pay auction. A restricted profit‐maximizing mechanism that implements efficient allocation is also characterized. As in Gradstein (1994), when provision is always efficient, that is, the sum of consumers' values always exceeds the provision cost, efficient allocation is achievable through a profit‐maximizer. However, this is not the case when provision is not efficient. Date: 2009 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:11:y:2009:i:3:p:343-362 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC. |
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