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Provision of Differentiated Public Goods within Organizations

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  • Zudenkova, Galina

Abstract

This paper analyzes provision of a differentiated public good within an organization. A moderate principal assigns a public good production to one of two extreme agents. A contributing agent then gets the opportunity to choose a public good variety he prefers but has to carry a cost of production. If a production cost is lower than a benefit from having their preferred public good variety implemented then the agents seek assignment. I show that in this case the principal makes the agents compete by committing to public good varieties they would provide if selected. The agents want to make themselves an attractive choice and so announce moderate (still divergent) varieties if production is costly, and the principal's preferred variety if production is not costly. However, if the production cost exceeds the benefit from having their preferred public good variety implemented then the agents want to avoid assignment. My results suggest that in this case the principal just assigns an unpopular public good production to a less extreme agent.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 50489.

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Date of creation: 01 Sep 2013
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Handle: RePEc:pra:mprapa:50489

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Keywords: Differentiated Public Goods; Public Good Provision; Spatial Competition.;

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  1. Cornes, Richard & Sandler, Todd, 1994. "The comparative static properties of the impure public good model," Journal of Public Economics, Elsevier, vol. 54(3), pages 403-421, July.
  2. Wittman, Donald, 1977. "Candidates with policy preferences: A dynamic model," Journal of Economic Theory, Elsevier, vol. 14(1), pages 180-189, February.
  3. Harbaugh, William T., 1998. "What do donations buy?: A model of philanthropy based on prestige and warm glow," Journal of Public Economics, Elsevier, vol. 67(2), pages 269-284, February.
  4. Andreoni, James, 1988. "Privately provided public goods in a large economy: The limits of altruism," Journal of Public Economics, Elsevier, vol. 35(1), pages 57-73, February.
  5. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135.
  6. 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.
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