A minimum-offer Lindahl mechanism for the provision of public goods

Abstract

Efficient provision of public goods continues to be a major problem of interest in economics. In situations where government-level intervention is not practical, but some information about participants is available, several mechanisms exist which can implement fair and efficient Lindahl (1958) equilibrium outcomes. However, existing Lindahl mechanisms do not allow for strategy-free implementation and require specific informational assumptions that may not always be realistic. We propose a minimum-offer Lindahl mechanism (MOLM) where players are given Lindahl cost shares and asked to suggest total provision levels. The lowest suggestion is implemented, and players pay an amount proportional to their cost share. The MOLM implements the Lindahl outcome in weakly dominant strategies and can work under informational conditions not covered by previous mechanisms. For example, the MOLM requires knowledge of the Lindahl prices to implement but not knowledge of the efficient provision level, while the widely-used provision point mechanism (PPM) requires the reverse.