Public Goods and Congestion

We examine the strategy-proof provision of public goods when agents care not only about the level of provision of a public good, but also the number of consumers. We show that on such domains strategy-proof and eecient social choice functions must be rigid in that they must always assign a xed number of consumers, regardless of individual desires to participate. When congestion eeects dominate (individuals prefer to have fewer other consumers) only a single individual is assigned to consume and so the rule must be dictatorial. In contrast, when cost sharing eeects dominate (agents prefer to have more consumers) the entire society must be assigned to consume the good even if some prefer not to participate, and then a generalized median rule selects the level or location of the good. When both eeects are present, a strategy-proof and eecient rules must x the number of consumers and use a hierarchical rule to select those consumers and use a variation of a generalized median rule to select the level of the public good. Under heterogeneity in agents' views on the optimal number of consumers, the strategy-proof and eecient social choice functions are much more limited and in an important case must be dictatorial.