Document Type
Discussion Paper
Publication Date
10-1-2003
CFDP Number
1441
CFDP Pages
52
Abstract
This paper studies the role of bundling in the efficient provision of excludable public goods. We show that bundling in the provision of unrelated public goods can enhance social welfare. With a large number of goods and agents, first best can be approximated with pure bundling. For a parametric class of problems with binary valuations, we characterize the optimal mechanism, and show that bundling alleviates the free riding problem in large economies and decreases the extent of use exclusions. Both results are related to the idea that bundling makes it possible to reduce the incidence of exclusions because the variance in the relevant valuations decreases.
Recommended Citation
Fang, Hanming and Norman, Peter, "An Efficiency Rationale for Bundling of Public Goods" (2003). Cowles Foundation Discussion Papers. 1716.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/1716