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Non-monotonic group-size effect in repeated provision of public goods

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  • Wang, Chengsi
  • Zudenkova, Galina

Abstract

This paper analyzes the effect of a change in group size on incentives to contribute in repeated provision of pure public goods. We develop a model in which group members interact repeatedly, and might be temporarily unable to contribute to public goods production during some periods. We show that an increase in the group size generates two opposite effects – the standard free-riding effect that suppresses cooperation, and the novel large-scale effect that enhances cooperation. Our results indicate that the former effect dominates in relatively large groups while the latter dominates in relatively small groups. We, therefore, provide a rationale for a non-monotonic group-size effect that may explain previous empirical and experimental findings.

Suggested Citation

  • Wang, Chengsi & Zudenkova, Galina, 2016. "Non-monotonic group-size effect in repeated provision of public goods," European Economic Review, Elsevier, vol. 89(C), pages 116-128.
  • Handle: RePEc:eee:eecrev:v:89:y:2016:i:c:p:116-128
    DOI: 10.1016/j.euroecorev.2016.06.008
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    References listed on IDEAS

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    More about this item

    Keywords

    Pure public goods; Repeated game; Non-monotonic group-size effect;

    JEL classification:

    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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