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Two-Part Tariff Lottery: A Means to Provide Public Good at the Social Optimum
School of Development Economics, National Institute of Development Administration, Bangkok, Thailand
Department of Economics, University of Ottawa, Ontario, Canada
- 1 School of Development Economics, National Institute of Development Administration, Bangkok, Thailand
- 2 Department of Economics, University of Ottawa, Ontario, Canada
Theoretical Economics Letters·Volume 02 (2012)·Pages 31–39·Published 23 February 2012·DOI10.4236/tel.2012.21006
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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.
KeywordsNon-Profit FirmsLotteryPublic GoodsTwo-Part Tariff
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