Matching in Economies with Public Goods: A Survey

It is a standard result in the theory of voluntary provision of public goods that the non-cooperative Nash equilibrium in individual public good contribution gives a level of public good supply which is too low as compared to Pareto optimal outcomes. To overcome this underprovision problem the application of "matching mechanisms" has been suggested which means that- in a Pigouvian style - the public good contributions made by some or all agents are subsidized by other agents. In my talk which gives a review of the literature the working, i.e. the opportunities and limitations of such matching mechanisms will be discussed mainly from a theoretical perspective. Some hints at the potential applicability of the matching approach to global climate policy will be added.