A voluntary participation game with a non-excludable public good

In the previous mechanism design on public goods, it was implicitly assumed that every agent must participate in the mechanism that the designer provi des. This approach neglects non-excludability of public goods. We explicitl y incorporate non-excludability and examine a two-stage game with voluntary participation: In the first stage, each agent simultaneously decides wheth er she participates ill the mechanism or not, and in the second stage, know ing the other agents' participation decisions, the agents who selected part icipation in the first stage choose their strategies. Participation of all agents is not an equilibrium in many situations. Journal of Economic Litera ture Classification Numbers: C72, D71, D78, H41. (C) 1999 Academic Press.