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- Title
Public-Good Provision with Many Participants.
- Authors
Hellwig, Martin F.
- Abstract
For a nonexcludable public good with benefit and cost functions independent of the number of participants, this paper studies second-best allocations under Bayesian interim incentive compatibility and interim individual rationality. As the number of participants becomes large, second-best provision levels converge in distribution to first-best levels if the latter are bounded. Second-best provision levels become large in absolute terms but small relative to first-best levels if benefit and cost functions are isoelastic. In contrast, for an excludable public good, the ratio of second-best to first-best levels is bounded away from zero.
- Subjects
PUBLIC goods; BAYESIAN analysis; PUBLIC finance; ECONOMETRICS
- Publication
Review of Economic Studies, 2003, Vol 70, Issue 3, p589
- ISSN
0034-6527
- Publication type
Article
- DOI
10.1111/1467-937X.00257