Public goods, participation constraints, and democracy: A possibility theorem

Grüner, Hans Peter ; Koriyama, Yukio

Document Type: Article
Year of publication: 2012
The title of a journal, publication series: Games and Economic Behavior
Volume: 75
Issue number: 1
Page range: 152-167
Place of publication: Amsterdam
Publishing house: Elsevier
ISSN: 0899-8256
Publication language: English
Institution: School of Law and Economics > VWL, Wirtschaftspolitik (Grüner)
Subject: 320 Political science
330 Economics
Classification: JEL: D02, D61, D71, H41,
Keywords (English): Public goods provision, Ex post efficiency, Participation constraints, Majority voting
Abstract: It is well known that ex post efficient mechanisms for the provision of indivisible public goods are not interim individually rational. However, the corresponding literature assumes that agents who veto a mechanism can enforce a situation in which the public good is never provided. This paper instead considers majority voting with uniform cost-sharing as the relevant status quo. Efficient mechanisms may then exist, which also satisfy all agents’ interim participation constraints. In this case, ex post inefficient voting mechanisms can be replaced by efficient ones without reducing any individual’s expected utility. Intuitively, agents with a low willingness to pay have to contribute more under majority rule than under an efficient mechanism with a balanced budget. Although this possibility theorem is not universal in the sense of Schweizer (2006), an asymptotic possibility is obtained for certain type distributions.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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