The private provision of excludable public goods: An inefficiency result

Does voluntary contracting suffice for the efficient provision of excludable public goods? Even in a complete information environment, we find that the answer is negative. The reason is that some agents may profit from not participating at the provision stage, but instead negotiate access ex post.

► We study the private provision of excludable public goods.
► We identify an incentive to wait in order to negotiate access later.
► We demonstrate how such free-riding depends on the model’s parameters.
► We demonstrate that the argument is quite robust to alternative assumptions.