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Public Goods and Minimum Provision Levels: Does the institutional formation affect cooperation?

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  • Martinsson, Peter

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Persson, Emil

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

We investigate the role of institutional formation on the implementation of a binding minimum contribution level in a linear public goods game. Groups either face the minimum level exogenously imposed by a central authority or are allowed to decide for themselves by means of a group vote whether or not a minimum level should be implemented. We find a binding minimum contribution level to have a positive and substantially significant effect on cooperation. The main impact is on the extensive margin, meaning that it is possible to force free riders to increase their contribution without crowding out others’ voluntary contributions. This result is robust to the mode of implementation and thus when the minimum level is enforceable, it is a simple policy that will increase provision of the public good.

Suggested Citation

  • Martinsson, Peter & Persson, Emil, 2016. "Public Goods and Minimum Provision Levels: Does the institutional formation affect cooperation?," Working Papers in Economics 655, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0655
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    File URL: http://hdl.handle.net/2077/42418
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    Keywords

    Public goods; Minimum level; Voting; Experiment;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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