Efficient provision of public goods with endogenous redistribution

Luca Anderlini and Paolo Siconolfi ()

Review of Economic Design, 2004, vol. 8, issue 4, 413-447

Abstract: We study a balanced mechanism that is capable of implementing in Nash equilibrium all the Pareto-efficient individually rational allocations for an economy with public goods. The Government chooses a set of weights directly related to the Lindahl prices corresponding to the Pareto-efficient allocation to be implemented. The mechanism then guarantees that initial endowments are re-allocated so that the chosen vector of Lindahl prices is indeed a Lindahl equilibrium, and implements the corresponding Lindahl allocation. Finally, besides being balanced, our mechanism is ‘simple’. Each agent has to declare a desired increase in the amount of public good, and a vector of redistributive transfers of initial endowments (across other agents). Copyright Springer-Verlag Berlin/Heidelberg 2004

Keywords: Optimal provision of public goods; endogenous redistribution; Nash implementation (search for similar items in EconPapers)
Date: 2004
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DOI: 10.1007/s10058-004-0113-7

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