Revelation of preference for a public good with imperfect exclusion

Abstract

Two attributes are ordinarily associated with pure public goods in distinguishing them from purely private goods. First, the consumption of a pure public good by one individual does not diminish its availability to any other individual. Second, no individual can be excluded from the consumption of a pure public good if it is available. In contrast, consumption by one individual of a pure private good denies its consumption to another and such a good cannot be consumed without being possessed by the individual. Fundamental work on the impact of pure public goods for economic theory has been done by Samuelson [14, 15, 16], who displayed the marginal conditions for Pareto optimality in an economy with both pure private and pure public goods, and further, has drawn out the implications of public goods' special nature for the allocative efficiency of perfect competition. Another important contributor to the theoretical development has been Musgrave, who concerned himself especially with the second attribute of a pure public good and enunciated the "exclusion principle" [12, p. 9 and p. 10 ftnt. 1; 11, p. xvi].