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Public Goods Provision with Rent-extracting Administrators

Author

Listed:
  • Tobias Cagala
  • Ulrich Glogowsky
  • Veronika Grimm
  • Johannes Rincke

Abstract

This article studies public goods provision when contributors repeatedly interact with rent-extracting administrators. Our main finding is that the presence of an administrator reduces contributions but only because rent extraction lowers the marginal per capita return of investing in the public good. Analysing the interactions between the contributors and the administrator, we demonstrate that rent-extraction and cooperation shocks trigger short-run adjustments in agents’ behaviour. However, shocks do not have permanent effects. This explains the long-run resilience of cooperation to rent extraction. We also show that cooperative attitudes and trust explain the heterogeneity in the short-run volatility of public goods provision.

Suggested Citation

  • Tobias Cagala & Ulrich Glogowsky & Veronika Grimm & Johannes Rincke, 2019. "Public Goods Provision with Rent-extracting Administrators," The Economic Journal, Royal Economic Society, vol. 129(620), pages 1593-1617.
    • Handle: RePEc:oup:econjl:v:129:y:2019:i:620:p:1593-1617.
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    File URL: http://hdl.handle.net/10.1111/ecoj.12614
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    Cited by:

    1. Banerjee, Ritwik & Boly, Amadou & Gillanders, Robert, 2022. "Anti-tax evasion, anti-corruption and public good provision: An experimental analysis of policy spillovers," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 179-194.
    2. Goeschl, Timo & Soldà, Alice, 2024. "(Un)Trustworthy pledges and cooperation in social dilemmas," Journal of Economic Behavior & Organization, Elsevier, vol. 223(C), pages 106-119.

    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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