On cost sharing in the provision of a binary and excludable public good

Jordi Massó, Antonio Nicolo, Arunava Sen, Tridib Sharmad, Levent Ülku

Research output: Contribution to journalArticlepeer-review

Abstract

We study efficiency and fairness properties of the equal cost sharing with maximal participation (ECSMP) mechanism in the provision of a binary and excludable public good. According to the maximal welfare loss criterion, the ECSMP is optimal within the class of strategyproof, individually rational and no-deficit mechanisms only when there are two agents. In general the ECSMP mechanism is not optimal: we provide a class of mechanisms obtained by symmetric perturbations of ECSMP with strictly lower maximal welfare loss. We show that if one of two possible fairness conditions is additionally imposed, the ECSMP mechanism becomes optimal.
Original languageEnglish
Article numberYJETH4340
Pages (from-to)30-49
Number of pages19
JournalJournal of Economic Theory
Volume155
DOIs
Publication statusPublished - 9 Jan 2015

Keywords

  • Binary public good; Excludability; Equal cost sharing; Maximal welfare loss

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