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

Listed author(s):
  • 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)

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.

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File URL: http://hdl.handle.net/2077/42418
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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 655.

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Length: 31 pages
Date of creation: Apr 2016
Handle: RePEc:hhs:gunwpe:0655
Contact details of provider: Postal:
Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden

Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/

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