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Cost-sharing mechanism for excludable goods with generalized non-rivalry

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  • Shichijo, Tatsuhiro
  • Fukuda, Emiko

Abstract

Excludable public goods with non-rivalry and private goods with network externalities have similar coordination problems. In this study, we define generalized non-rivalry to investigate coordination mechanisms for both types of goods. We employ the equal cost-sharing with maximal participation (ECSMP) mechanism, which has been studied for excludable public goods with non-rivalry. We find that the mechanism is optimal regarding two welfare criteria in an environment with generalized non-rivalry, within which this study characterizes the ECSMP mechanism. The results indicate that ECSMP is a promising mechanism in a broader context than that considered in the existing literature.

Suggested Citation

  • Shichijo, Tatsuhiro & Fukuda, Emiko, 2021. "Cost-sharing mechanism for excludable goods with generalized non-rivalry," Journal of Economic Theory, Elsevier, vol. 193(C).
    • Handle: RePEc:eee:jetheo:v:193:y:2021:i:c:s0022053121000508
    DOI: 10.1016/j.jet.2021.105233
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    More about this item

    Keywords

    Non-rivalry; Network externalities; Equal cost-sharing mechanism; Welfare maximization; Maximal welfare loss; Crowdfunding;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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