Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93789
Authors: 
Bierbrauer, Felix
Sahm, Marco
Year of Publication: 
2006
Series/Report no.: 
SFB/TR 15 Discussion Paper 159
Abstract: 
We study the classical free-rider problem in public goods provision in a large economy with uncertainty about the average valuation of the public good. Individual preferences over public goods are shaped by a skill and a taste parameter. We use a mechanism design approach to solve for the optimal utilitarian provision rule. The relevant incentive constraints for information aggregation ensure that individuals behave as if they were engaging in informative voting over the level of public good provision. It is shown that the use of information by an optimal provision rule is inversely related to the polarization of preferences which results from the properties of the skill distribution.
Subjects: 
information aggregation
informative voting
public goods
two-dimensional heterogeneity
JEL: 
H41
D71
D72
D82
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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