Neutral public good mechanisms

Abstract

In this paper, I justify neutral mechanisms as the reasonable solutions for public good provision and cost shares in public goods problems. I illustrate that neutral mechanisms can be easily computed by the tractable set of conditions with straightforward interpretations for a class of public goods problems. I show that, unlike neutral mechanisms, ex ante incentive efficient mechanisms are not robust to a perturbation of the information structure at the time of mechanism selection. I highlight several merits of using neutral mechanisms instead of interim incentive efficient mechanisms: Neutral mechanisms yield sharp predictions, are invulnerable to the possibility of information leakage during the selection process, and have the attractive properties of both efficiency and equity. I discuss implications for the analysis of ex ante and interim incentive efficient mechanisms for public goods problems.