A Characterization of Interim Efficiency with Public Goods

We consider a Bayesian public goods environment with independent private valuations. We fully characterize interim efficient allocation rules and prove that they correspond to decision rules based on a virtual cost-benefit criterion, together with the appropriate incentive taxes. Compared to the classical Lindahl-Samuelson solution there are generally distortions that depend on the welfare weights because the efficient wayto reduce the tax burden on low-valuation (resp: high-valuation) types is ...