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Inequality and the Allocation of Collective Goods

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  • Caleb Cox
  • Brock Stoddard

Abstract

We examine the allocation of a voluntarily-provided collective good with inequality in endowments or productive capabilities. After group members choose their contributions to a collective good, a third-party allocator distributes the resulting value among the group members. With and without inequality, we find that allocators significantly improve efficiency compared to automatic equal division of the collective good. However, inequality creates a conflict between various notions of equitable distribution, potentially diminishing the allocator’s ability to incentivize contribution. Our results show that inequality in endowments or productive capabilities indeed reduces the effectiveness of allocators compared to the baseline case of equality. Key Words:

Suggested Citation

  • Caleb Cox & Brock Stoddard, 2023. "Inequality and the Allocation of Collective Goods," Working Papers 23-10, Department of Economics, Appalachian State University.
    • Handle: RePEc:apl:wpaper:23-10
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