Journal of Economic Behavior & Organization Vol. 48 (2002) 413–422 Dutch treat versus Oriental treat Jeong-Yoo Kim a,∗ , Hyung Bae a , Dongchul Won b a Department of Economics, Dongguk University, 3-26 Pildong, Chungku, Seoul 100-715, South Korea b Department of Industrial Information, Kongju National University, 527 Yesan, Chungnan 340-800, South Korea Received 2 June 2000; accepted 8 January 2001 Abstract Weintroduceaclassofgoodscalled“ping-ponggoods”whosevaluesaregeneratedonlythrough joint consumption by two or more people. Mainly, we compare the efficiency of two fee sharing rules. One is the Dutch rule, whereby each participant bears its own expenses and the other is the Oriental rule, whereby the initial proposer bears all the expenses. We assert that the consumers’ surplus under the Oriental rule is higher than the consumers’ surplus under the Dutch rule only if the per-person price is high and the number of participants in consuming a ping-pong good is small. © 2002 Elsevier Science B.V. All rights reserved. JEL classification: D69 Keywords: Ping-pong good; Dutch treat; Oriental treat; Fee-sharing rule 1. Introduction There are many commodities whose values are generated only through joint consump- tion by two or more people. Phone calls, mailing, and chatting or playing a computer game through networks are typical examples. Playing sports games like ping-pong, tennis or baseball, and card games like poker or bridge are other examples. A date or a sex are also examples of commodities for which we need a partner. We will call such a commodity involving an extreme form of externalities a “ping-pong good” or a “participatory good”. That is, a commodity is a ping-pong good if all the participating consumers can get pos- itive utility only when a certain number (more than one) of the consumers participate in consuming the commodity. An individual consumer’s decision to participate in consuming a ping-pong good is usually made based on the share of the price he has to pay, not on the total price, so ∗ Corresponding author. Tel.: +82-2-2260-3716; fax: +82-2-2260-3716. E-mail address: jyookim@dongguk.edu (J.-Y. Kim). 0167-2681/02/$ – see front matter © 2002 Elsevier Science B.V. All rights reserved. PII:S0167-2681(01)00244-X