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Private Provision of Public Goods between Families

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  • Richard Cornes

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  • Jun-ichi Itaya

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  • Aiko Tanaka

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Abstract

We consider a two-stage voluntary provision model where individuals in a family contribute to a pure public good and/or a household public good, and, at the same time, the parent makes private transfers to her child within the same family. We show not only that Warr’s neutrality holds regardless of the different timings of parent-to-child transfers, but also that there is a continuum of Nash equilibria in the sense that individuals’ contributions and parental transfers are indeterminate, although the allocation of each’s private consumption and total public good provision is uniquely determined. We further show that, even in the presence of impure altruism or productivity difference in supplying public goods, neutrality and uniqueness of the equilibrium allocation may persist.

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Bibliographic Info

Paper provided by Australian National University, College of Business and Economics, School of Economics in its series ANU Working Papers in Economics and Econometrics with number 2011-542.

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Length: 36 Pages
Date of creation: Apr 2011
Date of revision:
Handle: RePEc:acb:cbeeco:2011-542

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