The demand revelation process has been called a new and superior process for making social choices and holds some promise of creating an intellectual revolution in economics and politics. It relies on a so-called “Clarke tax” or pivot mechanism to ensure that individuals will adequately consider the social cost of their influence on social outcomes, thereby ensuring truthful revelation of preferences and overcoming the “free rider” problem of public goods provisioning. Demand Revelation and the Provision of Public Goods outlines Clarke’s approach to use demand revelation in the creation of demand revealing markets accompanied by the improved management of social entitlements to public goods and services. Based on these refinements, he shows ways to achieve improved government performance in areas of taxation, spending and government regulatory management. In this revised edition of his original 1980 book, Clarke reviews other recent related work, notably Martin Bailey’s Constitution for a Future Country, which describes in detail how these advances in an improved political economy can be achieved.

This paper summarizes the results of two experiments designed to evaluate the applicability of incentive compatible mechanisms such as the pivot mechanism to determine the public's preferences for environmental public goods. The first experiment employs a variant of the pivot mechanism to determine the appropriate level of a public good that is available in three discrete quantities. Although traditional public goods mechanisms determine the allocation of the good in continuously variable quantities, for many environmental public goods, such as the cleanup of a hazardous waste site, there may be only several discrete options that are feasible. The results indicate that using the pivot mechanism can result in truthful revelation of preferences for the public good, and hence selection of the optimal amount of the program to be implemented. The second experiment compares the ability of real and hypothetical versions of the pivot mechanism and provision point mechanism to generate accurate estimates of the public's willingness to pay for open space. The results provide mixed evidence of real and hypothetical versions of each mechanism to generate unbiased willingness to pay estimates.

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This dissertation comprises three manuscripts, all contributing to the literature of the private provision of public goods. In Chapters 2 (complete information, CI) and 3 (private value information, PI), we introduce two novel mechanisms for provision point public goods: The uniform price auction mechanism (UPA) collects an endogenously determined uniform price from everyone offering at least that price, while the uniform price cap mechanism (UPC) collects the uniform price from everyone offering at least that price, plus the full offer of everyone offering less. With CI, UPC has the same undominated perfect equilibria as standard provision point (PPM) and proportional rebate (PR) mechanisms-and UPA a somewhat broader set-but our mechanisms' wide-range-of-zero-marginal penalty structures may facilitate equilibrium selection and lead to higher contributions and more frequent provision. With PI, the uniform price mechanisms support Bayesian Nash equilibria (BNE) with higher contributions than the BNE of PPM or PR, potentially increasing efficiency. Our mechanisms outperform PR and PPM in both information environments in laboratory experiments: in general, UPC generates higher aggregate contributions and provision rates than PR and PPM; UPA attracts much higher contributions, although it provides less frequently. The ranking emerges because high offers are more common (especially among high-value people) in the uniform price mechanisms, where it is low cost to venture high offers to potentially meet other high offers to support provision. In Chapter 4, we study durable public good games with a tipping point, below which collapsing the stock is optimal. With a payoff function linear in stock and income and a logistic growth function, we show the existence of a tipping point. Further, under a dynamic voluntary contribution mechanism (DVCM), both the open-loop equilibrium and the Markov perfect equilibrium (MPE) result in socially inefficiently low steady states and higher tipping points. Better outcomes can be supported in the MPE than in the open-loop solution and the highest stable steady state in the MPE approaches the efficient level asymptotically as the discount rate approaches zero. Lastly, we extend DVCM, introducing a provision point in a dynamic provision point mechanism (DPPM) and we show that the most rapid approach path to the efficient stock is supported in a MPE of DPPM.