Nicolò A., Masso J., Sen A., Sharma T., Utku L. (2015)

On Cost Sharing in the Provision of an Excludable Public Good. Journal of Economic Theory, vol. 155, 30-49, 2015.

 

Abstract:

We study efficiency and fairness properties of the equal cost sharing with maximal participation (ECSMP) mechanism in the provision of a binary and excludable public good. According to the maximal welfare loss criterion, the ECSMP is optimal within the class of strategyproof, individually rational and no-deficit mechanisms only when there are two agents. In general the ECSMP mechanism is not optimal: we provide a class of mechanisms obtained by symmetric perturbations of ECSMP with strictly lower maximal welfare loss. We show that if one of two possible fairness conditions is additionally imposed, the ECSMP mechanism becomes optimal.