Auctions in Pricing Excludable Public Goods

点击翻译按钮获取中文摘要

In this project we study the use of auction mechanisms to provide a public project for a soci ety with multiple individuals. We consider a public project that can be consumed without rivalry by all agents but where exclusion of individuals is pos sible. We adopt excludability as an instrument of economic policy in order to ensure obtain voluntary participation by the individuals in the project. While the infor mation about the cost of the project can generally be assumed known to the planner, we allow the in formation about the agents' preferences and endow ments to be private. In this framework, the issues become whether or not to provide the excludable public good, whom to include, and how the costs of provision are to be shared. We borrow from the theory of auctions to charac terize two `auction-like` mechanisms for allocating excludable public goods. The first is a mechanism based on the increasing-bid, English auction we call the `English Auction-Like Mechanism.` The second is a mechanism based on Vickrey's second-price, sealed bid auction we call the `Sealed Bid Auction-Like Mechanism.` We show that, as in Vickrey (1961), the English Auction-Like Mechanism and the Sealed Bid Auction-Like Mechanism are strategy proof, and that they lead to equivalent outcomes. Moreover, the latter is closely related to the serial cost sharing rule and the conser vative equal cost rule, proposed by Moulin (1994). We extend his model by limiting the number of individuals who may consume the good non-rivalrously; that is, by introducing congestion in consumption. Prices play a dual role of in ducing truthful preference revelation and of a ra tioning device to allocate the good. The contributions of the project are two: to show that rules suggested by Moulin and Vickrey belong to the same family of extended auction-like mechanisms, thereby unifying two previously separate branches in the literature on mechanism design; and to character ize two well-defined auction-like mechanisms which can be shown to be easy to implement. This project constitutes the point of departure for a systematic analysis of strategy-proof mechanisms for allocating and pricing excludable public goods. This is an important direction which will ultimately result in a better understanding of cost sharing rules, their performance characteristics, and the ways in which they can be practically implemented. The re sults from this investigation have the potential to affect meaningfully the way private and public or ganizations allocate scarce resources to finance ac tivities such as computer networks, telecommunica tions systems, political parties, museums, libraries, schools, etc. These extensions will be the topic of a future full NSF proposal.