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Two-Part Tariff Lottery: A Means to Provide Public Good at the Social Optimum

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DOI: 10.4236/tel.2012.21006    3,462 Downloads   6,666 Views

ABSTRACT

Pure public goods provided by charitable organizations may be provided at the first-best level when the provision is financed by an appropriately designed lottery. If lottery tickets are sold using a two-part tariff, the level of provision of the public good is greater than when fees are not charged to participate in the lottery. Unlike [13] who asymptotically approach the first-best level of provision with an arbitrarily large prize, a Pareto efficient level of the public good is produced when participation fees for the lottery are set appropriately.

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A. Apinunmahakul and V. Barham, "Two-Part Tariff Lottery: A Means to Provide Public Good at the Social Optimum," Theoretical Economics Letters, Vol. 2 No. 1, 2012, pp. 31-39. doi: 10.4236/tel.2012.21006.

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