The provision and pricing of excludable public goods : Ramsey-Boiteux versus bundling

Hellwig, Martin

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URL:	http://ub-madoc.bib.uni-mannheim.de/2742
URN:	urn:nbn:de:bsz:180-madoc-27428
Document Type:	Working paper
Year of publication:	2004
The title of a journal, publication series:	None
Publication language:	English
Institution:	School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series:	Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
Subject:	330 Economics
Classification:	JEL: D61 H21 H41 H42 ,
Subject headings (SWD):	Öffentliches Gut , Gebühr , Ramsey-Zahl , Preisbündelung
Keywords (English):	Mechanism design , excludable public goods , Ramsey-Boitreux pricing , renegotiation proofness , bundling
Abstract:	This paper studies the relation between Bayesian mechanism design and the Ramsey-Boiteux approach to the provision and pricing of excludable public goods. For a large economy with private information about individual preferences, the two approaches are shown to be equivalent if and only if, in addition to incentive compatibility and participation contraints, the final allocation of private-good consumption and admission tickets to public goods satisfies a condition of renegotiation proofness. Without this condition, a mechanism involving mixed bundling, i.e. combination tickets at a discount, is superior.
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