Auction-like mechanisms for pricing excludable public goods

We study the problem of strategy-proof mechanism design for indivisible and excludable public goods. Applying Vickrey's theory of auctions we associat e a class of strategy-proof mechanisms to two types of procedures, the "Eng lish Auction-Like Mechanism" (EALM) and the "Sealed Bid Auction-Like Mechan ism" (SBALM). We show that these two Auction-Like Mechanisms lead to identi cal outcomes. We justify the use of these mechanisms as compared to other s trategy-proof mechanisms by arguing that outcomes of the SBALM maximize wel fare. In the absence of capacity constraints the SBALM balances the budget and becomes Moulin's (Rec. Econ. Strrcl. 61 (1994), 305-325) serial cost sh aring rule and the conservative equal costs rule. If capacity constraints a re binding, the SBALM does not necessarily balance the budget and becomes a generalized version of Vickrey's second price auction (see Kleindorfer and Sertel, J. Ec on. Theory 64 (1994), 20-34). Thus our results unify and pro vide justification for different procedures arising in two separate strands of the literature on mechanism design. (C) 1999 Academic Press.