Voluntary cost sharing for an excludable public project

The Clarke-Groves family of mechanisms provides a solution to the free-rider problem, that originates when providing a pure public good. These mechanisms, however, have two drawbacks: they are not voluntary, and they generate budget surpluses which cause welfare losses. In this paper we analyze the case of an indivisible excludable public project: the possibility of exclusion offers an additional instrument for avoiding these problems. We characterize cost sharing rules which satisfy the properties of strategyproofness and voluntariness. We show that these rules must charge the same price to all the individuals being provided with the good. A member of this class of voluntary cost sharing rules is the serial cost sharing rule (Moulin, ii., 1994. Serial cost sharing of excludable public goods. Review of Economic Studies 61, 305-325), of which we provide alternative characterizations. (C) 1999 Elsevier Science B.V. All rights reserved.