Does Competition Resolve the Free-Rider Problem in the Voluntary Provision of Impure Public Goods? Experimental Evidence
AbstractIn 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.
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Bibliographic InfoPaper provided by University of Canterbury, Department of Economics and Finance in its series Working Papers in Economics with number 10/07.
Length: 22 pages
Date of creation: 17 Mar 2010
Date of revision:
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Competition; public goods; experiment; voluntary contribution mechanism;
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
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