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Does Altruism Mitigate Free-riding and Welfare Loss?

  • Akram Temimi

    ()

    (University of Alabama)

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    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.

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    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 8 (2001)
    Issue (Month): 5 ()
    Pages: 1-8

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    Handle: RePEc:ebl:ecbull:eb-01h00003
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    1. Warr, Peter G., 1982. "Pareto optimal redistribution and private charity," Journal of Public Economics, Elsevier, vol. 19(1), pages 131-138, October.
    2. 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.
    3. Sugden, Robert, 1982. "On the Economics of Philanthropy," Economic Journal, Royal Economic Society, vol. 92(366), pages 341-50, June.
    4. 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.
    5. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-18, October.
    6. Bagnoli, Mark & Lipman, Barton L, 1992. " Private Provision of Public Goods Can Be Efficient," Public Choice, Springer, vol. 74(1), pages 59-78, July.
    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. Richard Cornes & Todd Sandler, 1998. "Pareto-Improving Redistribution and Pure Public Goods," Keele Department of Economics Discussion Papers (1995-2001) 98/04, Department of Economics, Keele University.
    9. 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.
    10. Feldstein, Martin & Clotfelter, Charles, 1976. "Tax incentives and charitable contributions in the United States : A microeconometric analysis," Journal of Public Economics, Elsevier, vol. 5(1-2), pages 1-26.
    11. Bergstrom, Theodore C, 1999. " Systems of Benevolent Utility Functions," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(1), pages 71-100.
    12. John Posnett & Todd Sandler, 1986. "Joint Supply and the Finance of Charitable Activity," Public Finance Review, , vol. 14(2), pages 209-222, April.
    13. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
    14. Cornes, Richard & Sandler, Todd, 1984. "Easy Riders, Joint Production, and Public Goods," Economic Journal, Royal Economic Society, vol. 94(375), pages 580-98, September.
    15. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
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