A Tatonement Process for Public Goods

In this paper, we discuss a procedure for choosing efficient output level for public goods. In section 1, we define the concepts of public goods. We introduce three assumptions. We then state the problem of finding a satisfactory procedure for guiding and financing the production of public goods. In section 2, we define our procedure, in the context of a partial equilibrium model, and prove a stability theorem. Section 3 is devoted to the important problem of incentives for correct revelation of preferences ; it is shown there that, at an equilibrium, our procedure provides proper incentives. A final section of concluding remarks points to various directions fo further research.