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Free Riding and the Inefficiency of the Private Production of Pure Public Goods

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  • R. C. Cornes
  • A. G. Schweinberger

Abstract

The traditional essentially Ricardian model of the voluntary production of pure public goods is generalized to comprise any number of private and public goods, factors of production, and households. The main novel feature of our approach is to use a household production model. The efficiency losses from the underproduction of pure public goods in a Cournot-Nash equilibrium are related to the scale of the economy (number of households) and the extent of free riding (non-contributions of one or more households to one or more public goods). It is also shown that significant welfare gains can be achieved by a reallocation of factors between public goods alone. Globally applicable, necessary and sufficient conditions for welfare improvements are derived and interpreted.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 29 (1996)
Issue (Month): 1 (February)
Pages: 70-91

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Handle: RePEc:cje:issued:v:29:y:1996:i:1:p:70-91

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Cited by:
  1. Karen Pittel & Dirk T.G. Rübbelke, 2004. "Private Provision of Public Goods : Incentives for Donations," CER-ETH Economics working paper series 04/34, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  2. Richard Cornes & Juni-ichi Itaya, 2004. "Models With Two Or More Public Goods," Department of Economics - Working Papers Series, The University of Melbourne 896, The University of Melbourne.
  3. Luigi Mittone & Francesca Bortolami, 2007. "Free riding and norms of control: self determination and imposition. An experimental comparison," CEEL Working Papers, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia 0704, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
  4. Lahiri, Sajal & Raimondos-Moller, Pascalis, 1998. "Public good provision and the welfare effects of indirect tax harmonisation," Journal of Public Economics, Elsevier, Elsevier, vol. 67(2), pages 253-267, February.
  5. Rob Moir, 2004. "Lotteries as a funding tool for financing public goods," CEEL Working Papers, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia 0401, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
  6. Kung, Fan-chin, 2008. "Voluntary contributions to multiple public goods in a production economy with widespread externalities," Journal of Mathematical Economics, Elsevier, vol. 44(12), pages 1364-1378, December.

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