The Impact of the Number of Participants on the Provision of a Public Good

Martin Hellwig

No 01-16, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: Under constraints of Bayesian interim incentive compatibility and individual rationality, the paper characterizes second-best allocations for the provision of a public good. If benefit and cost functions do not depend on the number of participants, it is always beneficial to have more participants. As the number of participants becomes large, second-best of public-good provision converge in distribution to first-best levels if these levels are bounded. If public-good provision levels are potentially unbounded, with isoelastic benefit and cost functions, then, with positive probability, second-best provision levels become large in absolute terms, but, relative to first-best levels, they go to zero.

Pages: 37 pages
Date: 2001-03-13
Note: Research support from the Deutsche Forschungsgemeinschaft through Sonderforschungsbereich 504 at the University of Mannheim is gratefully acknowledged.
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Working Paper: The Impact of the Number of Participants on the Provision of a Public Good (2001)
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