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Endogenous Preferences and Private Provision of Public Goods: a Double Critical Mass Model

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  • Antoci, Angelo

    ()
    (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

  • Sacco, Pier Luigi

    ()
    (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

  • Zarri, Luca

    ()
    (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

Abstract

In this paper we set up an evolutionary game-theoretic model aimed at addressing the issue of local public good provision via direct commitment of voluntary forces (namely, private donors and nonprofit providers) only. Two classes of agents are assumed to strategically interact within a double critical mass model, where the provision and maintenance, on voluntary bases, of a public-type good is concerned. Uncertainty as to equilibrium outcomes emerges as within both categories a positive proportion of agents faces the temptation to opportunistically free ride on others efforts. Further, private donors and nonprofit providers payoff functions are interdependent, in the sense that (a) potential donors decide to be actual donors only insofar as a large enough proportion of nonprofit organizations provides a high effort level, otherwise they act as free riders; (b) nonprofit organizations, in turn, prefer to exert a high productive effort only insofar as a large enough proportion of potential donors acts as actual donors, otherwise they exert a low effort level. Through this analytical framework, we are able to focus on the critical factors affecting the dynamic outcome of such interaction: under certain conditions, in a medium-long run perspective, even in contexts where, initially, either a large proportion of agents behaves as free riders or a large proportion of nonprofit organizations exerts a low effort level, the local public good may be provided.

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Bibliographic Info

Paper provided by Associazione Italiana per la Cultura della Cooperazione e del Non Profit in its series AICCON Working Papers with number 2-2004.

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Length: 29 pages
Date of creation: 05 Oct 2004
Date of revision:
Handle: RePEc:ris:aiccon:2004_002

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Keywords: Public Goods; Evolutionary Crowding-out; Voluntary Sector;

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References

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  1. repec:att:wimass:9006 is not listed on IDEAS
  2. 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.
  3. Sacco, Pier Luigi, 1992. "Projectual vs. adaptive behavior : A comment on Heiner," Journal of Economic Behavior & Organization, Elsevier, vol. 18(1), pages 119-122, June.
  4. Cressman, R., 1997. "Local stability of smooth selection dynamics for normal form games," Mathematical Social Sciences, Elsevier, vol. 34(1), pages 1-19, August.
  5. Sacco, Pier Luigi, 1994. "Can People Learn Rational Expectations? An 'Ecological' Approach," Journal of Evolutionary Economics, Springer, vol. 4(1), pages 35-43, March.
  6. Carole Uhlaner, 1989. "“Relational goods” and participation: Incorporating sociability into a theory of rational action," Public Choice, Springer, vol. 62(3), pages 253-285, September.
  7. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-77, June.
  8. Walter Santagata & Giovanni Signorello, 2000. "Contingent Valuation of a Cultural Public Good and Policy Design: The Case of ``Napoli Musei Aperti''," Journal of Cultural Economics, Springer, vol. 24(3), pages 181-204, August.
  9. Payne, A. Abigail, 1998. "Does the government crowd-out private donations? New evidence from a sample of non-profit firms," Journal of Public Economics, Elsevier, vol. 69(3), pages 323-345, September.
  10. 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.
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