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Cost-sharing Rules and Efficient Provisions of Public Goods

Author

Listed:
  • Yongsheng Xu
  • Li Zhang
  • Xinye Zheng

Abstract

We develop a simple scheme for the provision of public good and show that, under certain conditions, the equilibrium provision of the public good is at the efficient level. Our scheme is based on conventional games of private provision of the public good with an exogenously given cost structure to share the cost of the provision of the public good. We also give a characterization of the class of cost-sharing rules that induce the efficient provision of the public good at the equilibrium.

Suggested Citation

  • Yongsheng Xu & Li Zhang & Xinye Zheng, 2013. "Cost-sharing Rules and Efficient Provisions of Public Goods," Studies in Microeconomics, , vol. 1(2), pages 235-241, December.
    • Handle: RePEc:sae:miceco:v:1:y:2013:i:2:p:235-241
    DOI: 10.1177/2321022213501261
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    References listed on IDEAS

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    1. Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, vol. 49(1), pages 65-71, January.
    2. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    3. Josef Falkinger, 2000. "A Simple Mechanism for the Efficient Provision of Public Goods: Experimental Evidence," American Economic Review, American Economic Association, vol. 90(1), pages 247-264, March.
    4. Varian, Hal R, 1994. "A Solution to the Problem of Externalities When Agents Are Well-Informed," American Economic Review, American Economic Association, vol. 84(5), pages 1278-1293, December.
    5. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    6. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
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