A Case for Bundling Public Goods Contributions?
We extend the model of voluntary contributions to multiple public goods by allowing for bundling of the public goods. Specifically, we study the case where agents contribute into a common pool which is then allocated towards the financing of two pure public goods. We explore the welfare implications of allowing for such bundling vis-a-vis a separate contributions scheme. We show that when agents have homogeneous preferences, they cannot be made better off with a bundling scheme. On the contrary, in the generic case when agents are heterogenous in their incomes and preferences, bundling may increase joint welfare compared to a separate contribution scheme, in particular for higher income inequality among the agents. It is interesting to note that the welfare improvement occurs despite a decrease in total contributions. Our findings have implications for the design of charitable institutions and international aid agencies.
|Date of creation:||Jun 2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://business.fau.edu/economics
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Andreoni, James, 1988. "Privately provided public goods in a large economy: The limits of altruism," Journal of Public Economics, Elsevier, vol. 35(1), pages 57-73, February.
- Dayton-Johnson, Jeff & Bardhan, Pranab, 1996.
"Inequality and Conservation on the Local Commons: A Theoretical Exercise,"
Center for International and Development Economics Research, Working Paper Series
qt7f9913w9, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
- Jeff Dayton-Johnson & Pranab Bardhan, 2002. "Inequality And Conservation On The Local Commons: A Theoretical Exercise," Economic Journal, Royal Economic Society, vol. 112(481), pages 577-602, July.
- Jeff Dayton-Johnson and Pranab Bardhan., 1996. "Inequality and Conservation on the Local Commons: A Theoretical Exercise," Center for International and Development Economics Research (CIDER) Working Papers C96-071, University of California at Berkeley.
- Bilodeau, Marc, 1992. "Voluntary contributions to united charities," Journal of Public Economics, Elsevier, vol. 48(1), pages 119-133, June.
- Simon Clark & Ravi Kanbur, 2004.
"Stable Partnerships, Matching, and Local Public Goods,"
ESE Discussion Papers
82, Edinburgh School of Economics, University of Edinburgh.
- Clark, Simon & Kanbur, Ravi, 2004. "Stable partnerships, matching, and local public goods," European Economic Review, Elsevier, vol. 48(4), pages 905-925, August.
- Clark, Simon & Kanbur, Ravi, 2002. "Stable Partnerships, Matching, and Local Public Goods," Working Papers 127325, Cornell University, Department of Applied Economics and Management.
- Fang, Hanming & Norman, Peter, 2004.
"An Efficiency Rationale for Bundling of Public Goods,"
Microeconomics.ca working papers
norman-04-11-21-09-39-13, Vancouver School of Economics, revised 08 Feb 2005.
- Fang,H. & Norman,P., 2003. "An efficiency rationale for bundling of public goods," Working papers 19, Wisconsin Madison - Social Systems.
- Peter Norman, 2004. "An Efficiency Rational for Bundling of Public Goods," Theory workshop papers 658612000000000084, UCLA Department of Economics.
- Hanming Fang & Peter Norman, 2003. "An Efficiency Rationale for Bundling of Public Goods," Cowles Foundation Discussion Papers 1441, Cowles Foundation for Research in Economics, Yale University.
- Cornes, Richard, 1993. "Dyke Maintenance and Other Stories: Some Neglected Types of Public Goods," The Quarterly Journal of Economics, MIT Press, vol. 108(1), pages 259-71, February.
- McAfee, R Preston & McMillan, John & Whinston, Michael D, 1989. "Multiproduct Monopoly, Commodity Bundling, and Correlation of Values," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 371-83, May.
- 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.
- Peter Norman & Hanming Fang, 2004. "An Efficiency Rationale for the Bundling of Public Goods," Econometric Society 2004 North American Summer Meetings 458, Econometric Society.
- Warr, Peter G., 1983. "The private provision of a public good is independent of the distribution of income," Economics Letters, Elsevier, vol. 13(2-3), pages 207-211.
- Marcel Fafchamps & Steven N. Durlauf, 2004.
Economics Series Working Papers
WPS/2004-14, University of Oxford, Department of Economics.
- Steven N. Durlauf & Marcel Fafchamps, 2004. "Social Capital," NBER Working Papers 10485, National Bureau of Economic Research, Inc.
- Steven N. Durlauf & Marcel Fafchamps, 2004. "Social Capital," CSAE Working Paper Series 2004-14, Centre for the Study of African Economies, University of Oxford.
- Durlauf,S.N. & Fafchamps,M., 2004. "Social capital," Working papers 12, Wisconsin Madison - Social Systems.
- Steven Durlauf & Marcel Fafchamps, 2004. "Social Capital," Development and Comp Systems 0409060, EconWPA.
- Bilodeau, Marc & Slivinski, Al, 1997. "Rival charities," Journal of Public Economics, Elsevier, vol. 66(3), pages 449-467, December.
- Richard Cornes & Juni-ichi Itaya, 2004. "Models With Two Or More Public Goods," Department of Economics - Working Papers Series 896, The University of Melbourne.
- Adams, William James & Yellen, Janet L, 1976. "Commodity Bundling and the Burden of Monopoly," The Quarterly Journal of Economics, MIT Press, vol. 90(3), pages 475-98, August.
- Dreze, Jean & Sen, Amartya, 1999. "India: Economic Development and Social Opportunity," OUP Catalogue, Oxford University Press, number 9780198295280, March.
- Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
- Varian, Hal R., 1994. "Sequential contributions to public goods," Journal of Public Economics, Elsevier, vol. 53(2), pages 165-186, February.
- Gradstein, Mark, 1992. "Time Dynamics and Incomplete Information in the Private Provision of Public Goods," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 581-97, June.
When requesting a correction, please mention this item's handle: RePEc:fal:wpaper:05005. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vadym Volosovych)The email address of this maintainer does not seem to be valid anymore. Please ask Vadym Volosovych to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.