Optimal Provision of Multiple Excludable Public Goods

Abstract

This paper studies the optimal provision mechanism for multiple excludable public goods. For a class of problems with symmetric goods and binary valuations, we show that the optimal mechanism involves bundling if a regularity condition, akin to a hazard rate condition, on the distribution of valuations is satisfied. Relative to separate provision mechanisms, the optimal bundling mechanism may increase the asymptotic provision probability of socially efficient public goods from zero to one, and decreases the extent of use exclusions. If the regularity condition is violated, the optimal solution replicates the separate provision outcome for the two-good case. (JEL D82, H41)