Efficient Mechanisms for Multiple Public Goods

Abstract

We propose two sequential mechanisms for efficient production of public goods. Our analysis differs from the existing literature in allowing for the presence of multiple public goods and in also being 'simple'. While both mechanisms ensure efficiency, the payoffs in the first mechanism are asymmetric, being sensitive to the order in which agents move. The second mechanism corrects for this through a two-stage game where the order of moves in the second stage is randomly determined. The payoffs from the second mechanism correspond to the Shapley value of a well-defined game which summarizes the production opportunities available to coalitions in the economy. (C) 2003 Elsevier B.V. All rights reserved.