Common agency and public good provision under asymmetric information

, () and , ()
Additional contact information
,: École des Hautes Études en Sciences Sociales, Toulouse School of Economics
,: Graduate School of Economics, Fundação Getulio Vargas
Authors registered in the RePEc Author Service: David MARTIMORT and Humberto Luiz Ataide Moreira ()

Theoretical Economics, 2010, vol. 5, issue 2

Abstract: The provision of public goods under asymmetric information has most often been viewed as a mechanism design problem under the aegis of an uninformed mediator. This paper focuses on institutional contexts without such mediator. Contributors privately informed on their willingness to pay non-cooperatively offer contribution schedules to an agent who produces the public good on their behalf. In any separating and informative equilibrium of this common agency game under asymmetric information, instead of reducing marginal contributions to free-ride on others, principals do so to screen the agent's endogenous private information obtained from privately observing other principals' offers. Under weak conditions, existence of a differentiable equilibrium is shown. Equilibria are always ex post inefficient and interim efficient if and only if the type distribution has a linear hazard rate. This points at the major inefficiency of contribution games under asymmetric information and stands in sharp contrast with the more positive efficiency result that the common agency literature has unveiled when assuming complete information. Extensions of the model address direct contracting between principals, the existence of pooling uninformative equilibria and the robustness of our findings to the possibility that principals entertain more complex communication with their agent.

Keywords: Common agency; asymmetric information; public goods; ex post and interim efficiency (search for similar items in EconPapers)
JEL-codes: D82 D86 H41 (search for similar items in EconPapers)
Date: 2010-05-17
References: Add references at CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://econtheory.org/ojs/index.php/te/article/viewFile/20100159/3775/147 (application/pdf)

Related works:
Working Paper: Common agency and public good provision under asymmetric information (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:the:publsh:507

Access Statistics for this article

Theoretical Economics is currently edited by Simon Board, Todd D. Sarver, Juuso Toikka, Rakesh Vohra, Pierre-Olivier Weill

More articles in Theoretical Economics from Econometric Society
Bibliographic data for series maintained by Martin J. Osborne ().