Title

Optimal Provision of Multiple Excludable Public Goods

Document Type

Discussion Paper

Publication Date

10-1-2003

CFDP Number

1441R

CFDP Revision Date

2006-04-01

CFDP Pages

44

Abstract

This paper studies the optimal provision mechanism for multiple excludable public goods when agents’ valuations are private information. For a parametric class of problems with binary valuations, we characterize the optimal mechanism, and show that it involves bundling. Bundling alleviates the free riding problem in large economies in two ways: first, it can increase the asymptotic provision probability of socially efficient public goods from zero to one; second, it decreases the extent of use exclusions.

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