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

Amornrat Apinunmahakul, Vicky Barham

Department of Economics, University of Ottawa, Ontario, Canada.
School of Development Economics, National Institute of Development Administration, Bangkok, Thailand.

DOI: 10.4236/tel.[phone]                

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.

Keywords

Non-Profit Firms; Lottery; Public Goods; Two-Part Tariff

Conflicts of Interest

The authors declare no conflicts of interest.

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