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

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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

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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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Publisher 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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Luigi Mittone & Francesca Bortolami, 2007. "Free riding and norms of control: self determination and imposition. An experimental comparison," CEEL Working Papers 0704, Computable and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia. [Downloadable!]
Rob Moir, 2004. "Lotteries as a funding tool for financing public goods," CEEL Working Papers 0401, Computable and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia. [Downloadable!]
Richard Cornes & Juni-ichi Itaya, 2004. "Models With Two Or More Public Goods," Department of Economics - Working Papers Series 896, The University of Melbourne. [Downloadable!]

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