Does Altruism Mitigate Free-riding and Welfare Loss?
A warm-glow motivation for charitable giving has recently been explored as a possible solution to the problem of inefficient private provision of public goods. However, the introduction of warm-glow affects both the efficient level of public good provision as well as the equilibrium level. Hence it is not clear whether warm-glow mitigates or exacerbates inefficiency. We revisit Andreoni's (1989) model of impure altruism and formally analyze this question. Cornes and Sandler''s (1986) index of easy riding and a version of Debreu''s (1951) coefficient of resource utilization are used as measures of free-riding and welfare loss.
Volume (Year): 8 (2001)
Issue (Month): 5 ()
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