Public good provision and the Smith Process |
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Authors: | Steffen Ziss |
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Institution: | (1) Department of Economics, University of Sydney, 2006, NSW, Australia |
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Abstract: | An existing public good provision mechanism known as the Smith Process (SP) is extended to allow for non-zero fixed cost,
non-constant marginal cost and imperfectly divisible output. Two versions of SP are considered: unrestricted (USP) and restricted
with a unanimity rule (RSPU). USP implements efficient choice provided the gap between marginal and average cost is sufficiently
low. RSPU relaxes the conditions for efficient implementation but increases the set of equilibria involving inefficient choice.
Furthermore, if weakly dominated strategies are eliminated, then non-provision is no longer an equilibrium under RSPU but
continues to be one under USP. |
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Keywords: | C72 D71 H41 |
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