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Free Riding and the Inefficiency of the Private Production of Pure Public Goods

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  • R. C. Cornes
  • A. G. Schweinberger

Abstract

The traditional essentially Ricardian model of the voluntary production of pure public goods is generalized to comprise any number of private and public goods, factors of production, and households. The main novel feature of our approach is to use a household production model. The efficiency losses from the underproduction of pure public goods in a Cournot-Nash equilibrium are related to the scale of the economy (number of households) and the extent of free riding (non-contributions of one or more households to one or more public goods). It is also shown that significant welfare gains can be achieved by a reallocation of factors between public goods alone. Globally applicable, necessary and sufficient conditions for welfare improvements are derived and interpreted.

Suggested Citation

  • R. C. Cornes & A. G. Schweinberger, 1996. "Free Riding and the Inefficiency of the Private Production of Pure Public Goods," Canadian Journal of Economics, Canadian Economics Association, vol. 29(1), pages 70-91, February.
    • Handle: RePEc:cje:issued:v:29:y:1996:i:1:p:70-91
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    1. Fries, Timothy L & Golding, Edward & Romano, Richard E, 1991. "Private Provision of Public Goods and the Failure of the Neutrality Property in Large Finite Economies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(1), pages 147-157, February.
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    6. Cornes, Richard & Sandler, Todd, 1985. "The Simple Analytics of Pure Public Good Provision," Economica, London School of Economics and Political Science, vol. 52(205), pages 103-116, February.
    7. 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.
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    Cited by:

    1. Yann Rébillé & Lionel Richefort, 2014. "Networks of many public goods with non-linear best replies," Working Papers hal-01074708, HAL.
    2. Lionel Richefort, 2018. "Warm-glow giving in networks with multiple public goods," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(4), pages 1211-1238, November.
    3. Dasgupta, Indraneel & Kanbur, Ravi, 2003. "Bridging Communal Divides: Separation, Patronage, Integration," Working Papers 127235, Cornell University, Department of Applied Economics and Management.
    4. Luigi Mittone & Francesca Bortolami, 2007. "Free riding and norms of control: self determination and imposition. An experimental comparison," CEEL Working Papers 0704, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    5. Nakagawa, Shintaro, 2019. "On the Maximum Number of Players Voluntarily Contributing to Two or More Public Goods," MPRA Paper 92719, University Library of Munich, Germany.
    6. Karen Pittel & Dirk T.G. Rübbelke, 2006. "Private provision of public goods: incentives for donations," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 33(6), pages 497-519, November.
    7. Jun-ichi Itaya & Atsue Mizushima, 2016. "Should Income Inequality be Praised? Multiple Public Goods Provision, Income Distribution and Social Welfare," CESifo Working Paper Series 6215, CESifo.
    8. Rob Moir, 2004. "Lotteries as a funding tool for financing public goods," CEEL Working Papers 0401, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    9. Richard Cornes & Jun‐Ichi Itaya, 2010. "On the Private Provision of Two or More Public Goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(2), pages 363-385, April.
    10. Richard Cornes & Juni-ichi Itaya, 2004. "Models With Two Or More Public Goods," Department of Economics - Working Papers Series 896, The University of Melbourne.
    11. Lahiri, Sajal & Raimondos-Moller, Pascalis, 1998. "Public good provision and the welfare effects of indirect tax harmonisation," Journal of Public Economics, Elsevier, vol. 67(2), pages 253-267, February.
    12. Kung, Fan-chin, 2008. "Voluntary contributions to multiple public goods in a production economy with widespread externalities," Journal of Mathematical Economics, Elsevier, vol. 44(12), pages 1364-1378, December.

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