Participation rules for Pareto-optimal clubs

This paper presents a unifying framework for the club participation problem using compensating variation measures of willingness-to-pay for membership. With more prospective club members than the equilibrium club population, Pareto-efficient participation rules are derived which depend upon whether or not individuals are assured of club access. Sale of lottery tickets offering club membership is shown to be a socially superior club participation allocation mechanism to sale of vouchers guaranteeing membership. The willingness-to-pay format readily encompasses the Buchanan case where all prospective club members are assured of club participation.