Provision of Differentiated Public Goods within Organizations
This paper analyzes provision of a differentiated public good within an organization. A moderate principal assigns a public good production to one of two extreme agents. A contributing agent then gets the opportunity to choose a public good variety he prefers but has to carry a cost of production. If a production cost is lower than a benefit from having their preferred public good variety implemented then the agents seek assignment. I show that in this case the principal makes the agents compete by committing to public good varieties they would provide if selected. The agents want to make themselves an attractive choice and so announce moderate (still divergent) varieties if production is costly, and the principal's preferred variety if production is not costly. However, if the production cost exceeds the benefit from having their preferred public good variety implemented then the agents want to avoid assignment. My results suggest that in this case the principal just assigns an unpopular public good production to a less extreme agent.
|Date of creation:||01 Sep 2013|
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