Financing Public Goods by Means of Lotteries
AbstractWhen viewed as taxes, lotteries are routinely criticized as being both inequitable and inefficient. But is this an entirely fair comparison? Frequently lotteries are used in lieu of voluntary contributions by private charities and governments when taxes are not feasible. When heterogeneous individuals with quasi-linear preferences participate in lotteries whose proceeds will be used to fund a public good, we find that, relative to voluntary contributions, wagers in the unique lottery equilibrium (a) increase the provision of the public good, (b) are welfare improving, and (c) provide levels of the public good close to first-best as the lottery prize increases. Copyright 2000 by The Review of Economic Studies Limited
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of Economic Studies.
Volume (Year): 67 (2000)
Issue (Month): 4 (October)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0034-6527
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Why buying a lottery ticket may be rational
by Economic Logician in Economic Logic on 2008-01-28 09:08:00
- Efficient raffling of public goods
by Economic Logician in Economic Logic on 2013-04-02 14:07:00
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