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On the efficient provision of public goods by means of biased lotteries: The two player case

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  • Franke, Jörg
  • Leininger, Wolfgang

Abstract

In this paper we analyze how biased lotteries can be used to overcome the free-riding problem in voluntary public good provision. We characterize the optimal combinations of bias and lottery prize and the conditions that guarantee efficient public good provision in equilibrium.

Suggested Citation

  • Franke, Jörg & Leininger, Wolfgang, 2014. "On the efficient provision of public goods by means of biased lotteries: The two player case," Economics Letters, Elsevier, vol. 125(3), pages 436-439.
    • Handle: RePEc:eee:ecolet:v:125:y:2014:i:3:p:436-439
    DOI: 10.1016/j.econlet.2014.10.024
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    References listed on IDEAS

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    1. Giebe, Thomas & Schweinzer, Paul, 2014. "Consuming your way to efficiency: Public goods provision through non-distortionary tax lotteries," European Journal of Political Economy, Elsevier, vol. 36(C), pages 1-12.
    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. Martin Kolmar & martin.kolmar@unisg.ch & Andreas Wagener, 2012. "Contests and the Private Production of Public Goods," Southern Economic Journal, John Wiley & Sons, vol. 79(1), pages 161-179, July.
    4. John Morgan, 2000. "Financing Public Goods by Means of Lotteries," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(4), pages 761-784.
    5. Jörg Franke & Christian Kanzow & Wolfgang Leininger & Alexandra Schwartz, 2013. "Effort maximization in asymmetric contest games with heterogeneous contestants," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(2), pages 589-630, March.
    6. Paul Pecorino & Akram Temimi, 2007. "Lotteries, Group Size, and Public Good Provision," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(3), pages 451-465, June.
    7. Duncan, Brian, 2002. "Pumpkin Pies and Public Goods: The Raffle Fundraising Strategy," Public Choice, Springer, vol. 111(1-2), pages 49-71, March.
    8. Lange, Andreas, 2006. "Providing public goods in two steps," Economics Letters, Elsevier, vol. 91(2), pages 173-178, May.
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    Citations

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    Cited by:

    1. Christopher Oconnor & Li Zhang & Cary Deck, 2022. "An examination of the effect of inequality on lotteries for funding public goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(4), pages 733-755, August.
    2. Damian S. Damianov & Ronald Peeters, 2018. "Prize‐Based Mechanisms For Fund‐Raising: Theory And Experiments," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1562-1584, July.
    3. Damianov, Damian S. & Peeters, Ronald, 2017. "On the disclosure of ticket sales in charitable lotteries," Economics Letters, Elsevier, vol. 150(C), pages 73-76.
    4. Feng, Xin & Lu, Jingfeng, 2017. "Uniqueness of equilibrium in two-player asymmetric Tullock contests with intermediate discriminatory power," Economics Letters, Elsevier, vol. 159(C), pages 61-64.
    5. Paan Jindapon & Zhe Yang, 2020. "Free riders and the optimal prize in public‐good funding lotteries," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1289-1312, September.
    6. Yang, Ran & Chen, Tong & Chen, Qiao, 2018. "The impact of lotteries on cooperation in the public goods game," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 512(C), pages 925-934.
    7. Liu, Tracy Xiao & Lu, Jingfeng & Wang, Zhewei, 2022. "Efficient public good provision by lotteries with nonlinear pricing," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 680-698.

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    More about this item

    Keywords

    Public good provision; Biased lotteries; Charities;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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