Property Rights and Efficiency of Public-Good Mechanisms under Asymmetric Information

Zvika Neeman ()

No 1092, Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science

Abstract: The Coase theorem states that in public good problems, when there are no transaction costs, once property rights are well defined, the efficient outcome will always result. In particular, the assignment of property rights has, by itself, no efficiency implications; different allocations of property rights have merely distributive consequences. Under asymmetric information, however, the situation is completely different. The results of Rob (1989) and Mailath and Postlewaite (1990) indicate that, under asymmetric information, there is no way to overcome the "free-rider" problem. As the number of agents increases, the probablity of implementing the efficient outcome decreases to zero. By contrast, in this paper, we identify initial allocations of property rights that are compatible with the operation of an efficient mechanism. We present a mechanism that satisifies the conditions of incentive compatibility and individual rationality (with respect to this initial allocation of property rights) for the individuals and for the firm and that implements the efficient outcome in public good problems under asymmetric information. In this respect, we identify "efficient" property rights structures.

Date: 1994-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.kellogg.northwestern.edu/research/math/papers/1092.pdf main text (application/pdf)

Related works:
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:nwu:cmsems:1092

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014. Contact information at EDIRC.
Bibliographic data for series maintained by Fran Walker ( this e-mail address is bad, please contact ).