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Individual Responsibility and the Funding of Collective Goods

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  • Louis Lévy-Garboua

    ()

  • Claude Montmarquette

    ()

  • Marie-Claire Villeval

Abstract

When a deficit occurs in the funding of collective goods, it is usually covered by raising the amount of taxes or by rationing the supply of the goods. This article compares the efficiency of these institutions. We report the results of a 2x2 experiment based on a game in the first stage of which subjects can voluntarily contribute to the funding of a collective good that is being used to compensate the victims of a disaster. In the second stage of the game, in case of a deficit, we introduce either taxation or rationing. Each treatment is subjected to two conditions: the burden of the deficit is either uniform for all the subjects, or individualized according to the first-stage contribution. We show that the individualized treatments favor the provision of the collective good through voluntary cooperation whereas the uniform treatments encourage free-riding. Individualized taxation brings the voluntary contributions closer to the optimum while uniform rationing appears to be the worst system since free-riding restrains the provision of the good. Un déficit dans le financement d'un bien collectif est généralement couvert soit par un accroissement des impôts, soit par un rationnement des usagers. Cet article compare l'efficacité de ces institutions. Nous présentons les résultats d'une expérience de laboratoire qui s'appuie sur un jeu dans la première étape duquel les sujets peuvent contribuer volontairement au financement d'un bien collectif destiné à indemniser les victimes d'un dommage. Dans la deuxième étape du jeu, en cas de déficit, nous introduisons soit un impôt, soit un rationnement. Chaque traitement est soumis à deux conditions: la prise en charge du déficit est soit uniforme pour tous les sujets, soit individualisée en fonction de la contribution volontaire du sujet en première étape. Nous montrons que les traitements individualisés favorisent la provision du bien collectif grâce à la coopération volontaire, alors que les traitements uniformes encouragent le comportement de passager clandestin. L'impôt individualisé rapproche les contributions volontaires de l'optimum, tandis que le rationnement uniforme est la pire institution puisque le comportement de passager clandestin restreint la provision du bien.

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Bibliographic Info

Paper provided by CIRANO in its series CIRANO Working Papers with number 2007s-18.

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Date of creation: 01 Sep 2007
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Handle: RePEc:cir:cirwor:2007s-18

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Keywords: Collective goods; taxation; rationing; responsibility; interior optimum; experiment.; bien collectif; fiscalité; rationnement; responsabilité; optimum intérieur; experience.;

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  1. Georg Kirchsteiger & Clemens Puppe, 1997. "On the possibility of efficient private provision of public goods through government subsidies," ULB Institutional Repository 2013/5913, ULB -- Universite Libre de Bruxelles.
  2. Tatsuyoshi Saijo & Hideki Nakamura, 2001. "The 'Spite' Dilemma in Voluntary Contribution Mechanism Experiments," Levine's Working Paper Archive 563824000000000155, David K. Levine.
  3. Kenneth Chan & Stuart Mestelman & Robert Moir & R. Muller, 1999. "Heterogeneity and the Voluntary Provision of Public Goods," Experimental Economics, Springer, vol. 2(1), pages 5-30, August.
  4. Marc WILLINGER & Anthony ZIEGELMEYER, 1999. "Framing and cooperation in public good games: an experiment with an interior solution," Working Papers of BETA 9901, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  5. Kenneth S. Chan & Stuart Mestelman & R. Andrew Muller, 1998. "Voluntary Provision of Public Goods," McMaster Experimental Economics Laboratory Publications 1998-02, McMaster University.
  6. Andreoni, James, 1993. "An Experimental Test of the Public-Goods Crowding-Out Hypothesis," American Economic Review, American Economic Association, vol. 83(5), pages 1317-27, December.
  7. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
  8. Goeree, Jacob K. & Holt, Charles A. & Laury, Susan K., 2002. "Private costs and public benefits: unraveling the effects of altruism and noisy behavior," Journal of Public Economics, Elsevier, vol. 83(2), pages 255-276, February.
  9. Roberto Burlando & Francesco Guala, 2005. "Heterogeneous Agents in Public Goods Experiments," Experimental Economics, Springer, vol. 8(1), pages 35-54, April.
  10. Keser, Claudia, 1996. "Voluntary contributions to a public good when partial contribution is a dominant strategy," Economics Letters, Elsevier, vol. 50(3), pages 359-366, March.
  11. Sefton, Martin & Steinberg, Richard, 1996. "Reward structures in public good experiments," Journal of Public Economics, Elsevier, vol. 61(2), pages 263-287, August.
  12. Roberts, Russell D, 1987. "Financing Public Goods," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 420-37, April.
  13. Dawes, Robyn M & Thaler, Richard H, 1988. "Anomalies: Cooperation," Journal of Economic Perspectives, American Economic Association, vol. 2(3), pages 187-97, Summer.
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