Multipart Pricing of Public Goods

The free market has long been regarded as inferior to other institutional devices for making resource allocational decisions involving public goods. Market failure comes about because direct bargaining regarding an output which is indivisible among users must result in explicit and unanimous agreement among these users. Such agreements, which involve multilateral bargains, may require prohibitive transactions costs. In addition, the cost of policing devices to exclude those not paying may be high. If policing and exchange costs associated with a market arrangement are too high, substitute non - market devices may be preferred...