This document summarizes and discusses the paper "Pareto Improvements under Matching Mechanisms in a Public Good Economy" presented on November 4, 2013. The paper models voluntary public good provision as a two-stage matching game and finds conditions where Pareto-improving equilibria always exist compared to Nash equilibria without matching. The discussant notes that the results are clearly visualized but questions whether the findings apply to the real world and if two matching equilibria could be compared in terms of Pareto improvements.

1. Comments on “Pareto
Improvements under Matching
Mechanisms in a Public Good
Economy” by Larry Liu
Discussed by Yingying Lu
Crawford School of Public Policy
November 4, 2013

2. Summary of the paper
• Matching game of voluntary provision of public good
• Based on a two-stage game (Guttman , 1978, 1987), but focus
on the second stage
• Aim: to evaluate matching equilibrium outcomes against Nash
equilibrium outcomes without matching
• Results:
– Conditions where Pareto-improving equilibrium always exists
• Implications:
– Wake up! No “Cinderella”!
– Half a loaf is better than no bread!

3. My comments…
Results are visualized such that it is easy to
understand.
? Is the finding also observable in the real
world?
? Is it possible also to evaluate two matching
equilibria in terms of Pareto improvement?
? Is it possible to generalize the results with
general utility functions? (A minor point)