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Contests and the Private Production of Public Goods

Author

Listed:
  • Martin Kolmar
  • martin.kolmar@unisg.ch

    (Institute for Public Finance and Financial Law, University of St. Gallen, Varnbüelstrasse 19, CH-9000 St. Gallen, Switzerland; corresponding author)

  • Andreas Wagener

    () (University of Hannover, Department of Economics and Management, Koenigsworther Platz 1, D-30167 Hannover, Germany;)

Abstract

The private provision of public goods generally suffers from two types of efficiency failures: sorting problems (the wrong individuals contribute) and quantity problems (an inefficient amount is provided). Embedding the provision game into a contest that rewards larger contributions with higher probabilities of winning a prize may remedy such failures. Applications include tenure decisions at universities, electoral competition among politicians, etc. We identify a tradeoff between the value of the prize and the decisiveness of the contest. High-powered incentives in contests may cause an overprovision of the public good or wasteful participation of unproductive individuals in the contest.

Suggested Citation

  • Martin Kolmar & martin.kolmar@unisg.ch & Andreas Wagener, 2012. "Contests and the Private Production of Public Goods," Southern Economic Journal, Southern Economic Association, vol. 79(1), pages 161-179, July.
  • Handle: RePEc:sej:ancoec:v:79:1:y:2012:p:161-179
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    File URL: http://dx.doi.org/10.4284/0038-4038-79.1.161
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    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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    Cited by:

    1. Beviá, Carmen & Corchón, Luis C., 2013. "Endogenous strength in conflicts," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 297-306.
    2. 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.
    3. repec:zbw:rwirep:0399 is not listed on IDEAS
    4. Franke, Jörg & Leininger, Wolfgang, 2013. "On the Efficient Provision of Public Goods by Means of Lotteries," Ruhr Economic Papers 399, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. Chowdhury, Subhasish M. & Lee, Dongryul & Sheremeta, Roman M., 2013. "Top guns may not fire: Best-shot group contests with group-specific public good prizes," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 94-103.
    6. J. Amegashie, 2006. "A contest success function with a tractable noise parameter," Public Choice, Springer, vol. 126(1), pages 135-144, January.
    7. Jörg Franke & Wolfgang Leininger, 2013. "On the Efficient Provision of Public Goods by Means of Lotteries," Ruhr Economic Papers 0399, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    8. Martin Kolmar & Dana Sisak, 2014. "(In)efficient public-goods provision through contests," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(1), pages 239-259, June.
    9. Julio R. Robledo, 2005. "The Effect of Litigation on Intellectual Property and Welfare," Vienna Economics Papers 0511, University of Vienna, Department of Economics.
    10. 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.
    11. Birendra K. Rai & Rajiv Sarin, 2007. "Parametric Contest Success Functions," Jena Economic Research Papers 2007-010, Friedrich-Schiller-University Jena.

    More about this item

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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