Exclusion and the Theory of Clubs
Robert Helsley and
Canadian Journal of Economics, 1991, vol. 24, issue 4, 889-99
This paper examines the competitive provision of club goods with costly exclusion. The authors consider two exclusion regimes: fine and coarse. With fine exclusion, a provider can charge both a membership fee and a per use price. With coarse exclusion, a provider can charge a membership fee only. The authors show that competitive club good providers choose both the efficient exclusion regime, which depends on the costs of exclusion, and the associated efficient resource allocation. Thus, with costly exclusion, the competitive provision of club goods is constrained Pareto efficient.
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