Does Competition Resolve the Free-Rider Problem in the Voluntary Provision of Impure Public Goods? Experimental Evidence

Type of content
Discussion / Working Papers
Publisher's DOI/URI
Thesis discipline
Degree name
Publisher
Department of Economics & Finance, College of Business & Economics, University of Canterbury
University of Canterbury. Department of Economics and Finance
Journal Title
Journal ISSN
Volume Title
Language
Date
2010
Authors
Neugebauer, T.
Servátka, M.
Abstract

In this paper we assume that a public project creates different payoffs to different contributors. Within this environment we study two institutions: Rank Order Voluntary Contribution Mechanism (Rank-Order-VCM) and Random Order Voluntary Contribution Mechanism (Random-Order-VCM). In Rank-Order-VCM individuals compete with their observable contributions towards a public project for a larger share of the payoff that the project generates while in Random-Order-VCM the shares are assigned randomly. We observe that competition outweighs incentives to free-ride and find that Random-Rank-VCM elicits median contributions equal to the full endowment throughout the whole experiment, including the last period. In Random-Rank-VCM the contributions are significantly lower and decline over time.

Description
Citation
Neugebauer, T., Servátka, M. (2010) Does Competition Resolve the Free-Rider Problem in the Voluntary Provision of Impure Public Goods? Experimental Evidence. No. 7/2010..
Keywords
competition, public goods, experiment, voluntary contribution mechanism
Ngā upoko tukutuku/Māori subject headings
ANZSRC fields of research
Fields of Research::38 - Economics::3801 - Applied economics::380114 - Public economics - publicly provided goods
Fields of Research::38 - Economics::3801 - Applied economics::380109 - Industry economics and industrial organisation
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