Public goods provision: Unit-by-unit cost-sharing rules and the core |
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Authors: | Yan Yu |
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Institution: | (1) Department of Economics, HKUST, Clear Water Bay, Kowloon, Hong Kong |
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Abstract: | In a simple model of one public good producible from one input, we show that unit-by-unit cost-sharing rules have two properties. First, a unit-by-unit cost-sharing rulealways chooses a core allocation. Second, every allocation in the core will be chosen by at least one unit-by-unit cost-shring rule. We argue that costs should be shared on a unit-by-unit basis. We propose a simple mechanism to implement the family of unit-by-unit
rules.
Received: 18 May 2005, Accepted: 6 December 2005
JEL Classification:
H41, C72, D78
I thank Hervé Moulin for helpful comments and discussions. All errors are mine. Financial support from the Hong Kong Research
Grants Council under grant RGC-DAG99/00.BM52 is gratefully acknowledged. |
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Keywords: | Public goods cost-sharing core |
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