Cooperative provision of indivisible public goods

Pierre Dehez ()

Theory and Decision, 2013, vol. 74, issue 1, 13-29

Abstract: A community faces the obligation of providing an indivisible public good that each of its members is able to provide at a certain cost. The solution is to rely on the member who can provide the public good at the lowest cost, with a due compensation from the other members. This problem has been studied in a non-cooperative setting by Kleindorfer and Sertel (J Econ Theory 64:20–34, 1994 ). They propose an auction mechanism that results in an interval of possible individual contributions whose lower bound is the equal division. Here, instead we take a cooperative stand point by modelling this problem as a cost sharing game that turns out to be a ‘reverse’ airport game whose core is shown to have a regular structure. This enables an easy calculation of the nucleolus that happens to define the upper bound of the Kleindorfer–Sertel interval. The Shapley value instead is not an appropriate solution in this context because it may imply compensations to non-providers. Copyright Springer Science+Business Media New York 2013

Keywords: Public goods; Cost sharing; Nucleolus; Shapley value; C71; D44; H41 (search for similar items in EconPapers)
Date: 2013
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Working Paper: Cooperative provision of indivisible public goods (2013)
Working Paper: Cooperative provision of indivisible public goods (2010)
Working Paper: Cooperative provision of indivisible public goods (2010)
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DOI: 10.1007/s11238-012-9311-x

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