Provision Of Pure Public Goods Research Articles

Rewards and cooperation in social dilemma games

Rewards are identified as a mechanism to sustain cooperation in standard Public Good games, but have been found less effective in Common Pool Resource games. Both paradigms are important for environmental and resource economics as they capture the essence of real-world environmental and resource problems – the provision of pure public goods, and overextraction of common pool resources. This paper aims to understand why rewards are effective in one paradigm and not in the other. We hypothesize that this is because of an important difference between the two; the marginal per capita return is uncertain in the Common Pool Resource game because subjects can undo cooperative actions of others. This is just one of many differences between the two paradigms and hence we test our Hypothesis by introducing the option to reward in the Claim game, a game identical to the standard public good game except that it allows for both giving and taking. This feature causes the marginal per capita return to be uncertain. We find that while rewards are effective in sustaining cooperation in the Public Good game, they are much less effective in the Claim game. We identify the underlying mechanism causing this differential impact.

Jeux coopératifs avec externalités

Cet article propose une revue de la littérature des jeux coopératifs avec externalités. L’article présente différentes extensions du cœur et de la valeur de Shapley aux jeux sous forme de fonction de partition. Différents modèles non-coopératifs de formation de coalitions sont également discutés. Enfin, l’article considère deux applications : la fourniture de biens publics purs et la formation d’associations d’entreprises et caractérise différentes extensions du cœur dans ces applications.

Understanding the public sector pay gap

We uncover the short- and long-run structural determinants of the existing cross-country heterogeneity in public-private pay differentials for a broad set of OECD countries. We explore micro data (EU-SILC, 2004–2012) and macro data (1970–2014). Three results stand out. First, when looking at pay gaps based on individual data, more than half of the cross-sectional variation of the sample can be accounted for by the degree of exposure to international competition, as well as by the size of the public sector labor force and its composition (i.e., the intensity in the provision of pure public goods), while labor market institutions play a very limited role. Second, we find that in some countries, pay gaps have narrowed down significantly during the recent financial crisis, this decrease being explained by the widespread process of fiscal consolidation rather than by changes in the previous factors. Third, we show that in the log run, openness to international trade and improvements in the institutional quality of governments are associated with decreases in the public-private wage gap. Our findings can be rationalized by a body of research stressing noncompetitive wage settlements in the public sector.

Non-monotonic group-size effect in repeated provision of public goods

This paper analyzes the effect of a change in group size on incentives to contribute in repeated provision of pure public goods. We develop a model in which group members interact repeatedly, and might be temporarily unable to contribute to public goods production during some periods. We show that an increase in the group size generates two opposite effects – the standard free-riding effect that suppresses cooperation, and the novel large-scale effect that enhances cooperation. Our results indicate that the former effect dominates in relatively large groups while the latter dominates in relatively small groups. We, therefore, provide a rationale for a non-monotonic group-size effect that may explain previous empirical and experimental findings.

Group size and the (in)efficiency of pure public good provision

Are larger groups better at cooperation than smaller groups? This paper investigates, under controlled conditions, the presence and direction of a possible group size effect in pure public good provision by large heterogeneous groups. Employing subjects drawn from the general population and introducing Internet-based procedures to study this question, we collected experimental evidence from 1110 subjects playing a linear public goods game in groups of 10, 40, and 100 members. We find a positive and significant group size effect: Increasing group size by a factor of 10 (4) increased efficiency by 10 (6) percent. The effect arose at the intensive margin and with repetition. Those who contributed contributed more in larger groups. Larger and smaller groups had similar initial contribution levels, but cooperation rates declined more slowly in the larger groups. Free-riding was invariant to group size, despite subjects׳ persistent beliefs of a negative group size effect at the extensive margin. Further econometric examination of the data supports these findings and provides starting points for future theoretical and experimental research on the group size effect.

''''''" - ' (How Compatible Are Huge Spending for 'Butter' and Quality Defense?)

Russian Abstract: Государство – ночной сторож в эпоху классического либерального капитализма демонстрировало способность выигрывать войны, сдерживать преступность и повышать качество правосудия. Современные демократии всеобщего избирательного права, взяв на себя обязательства заботиться о каждом от колыбели до могилы, выглядят куда менее грозными оппонентами. Даже их бесспорное военно-техническое превосходство не обеспечивает прежней защищенности их граждан. В данной статье мы проверяем гипотезу о способности государства выполнять качественно классические функции и одновременно тратить львиную долю бюджета на новые функции. То есть одновременно защищать, обеспечивая безопасность и правосудие, и заботиться. Рассматривая ряд примеров заведомо неэффективно выбора стратегий в сфере обороны, а также новые тенденции в сфере военной юстиции мы ставим под сомнение не только способность, но и политическую волю современных демократий защищать своих граждан. Статистический анализ дает основания для следующего объяснения столь радикальной смены приоритетов государства. Введение всеобщего избирательного права создало мощную электоральную базу для сторонников неограниченной экспансии государства. Новые группы бюрократов также заинтересованы в расширении бюджета и полномочий. Логика политической и бюрократической конкуренции создает спрос на выбор стратегий и законодательства исключающий эффективные оборонительные решения. Ключевые слова: чистые общественные блага, смешанные общественные блага; динамика военных расходов; качество чистого общественного блага оборона; электоральный спрос на общественные блага; всеобщее избирательное право. English Abstract: The correlation of state spending on pure and mixed public goods reflects the making of fundamental choices about state functions. Are pure public good defense normal quality provision compatible in Long Run with heavy spending on social sector (i.e. compatible with mixed public goods provision)? The main hypotheses tested: elected politicians and bureaucrats’ have strong incentives to choose wrong strategies in foreign and military policies if the state extends its responsibility far from the pure public goods provision limits. The case study (Protocol 1, June 8, 1977, to the Geneva Convention of 1949) shows, how punishment for military success strategy undermines incentives of army officers, making the military machine virtually inoperative. Artificially abridged Army capability provides the argument for the notion war is no solution. The set of the governments credibly ready to obey ratified Convention, are clearly segmented on two subsets. The 1st one includes the Governments bearing military responsibilities, military umbrella -givers, which abstained to impose all Protocol caused risks on the army officers (non-ratified – USA, Israel; ratified with strong reservations – UK, France, Germany) and the rest democratic countries – which are military umbrella takers, ratified the Protocol without significant reservations. Statistical analysis of Great Powers military spending historical trends used to test the main hypothesis. Preliminary statistical analysis fails to reject it. We believe bureaucratic competition for the responsibilities, staff and the budget provides satisfactory explanation of this phenomena.

How Butter Beats the Guns?

The correlation of state spending on pure and mixed public goods reflects the making of fundamental choices about state functions. Are pure public good defense normal quality provision compatible in Long Run with heavy spending on social sector (i.e. compatible with mixed public goods provision)? The main hypotheses tested: elected politicians and bureaucrats’ have strong incentives to choose wrong strategies in foreign and military policies if the state extends its responsibility far from the pure public goods provision limits. The case study (Protocol 1, June 8, 1977, to the Geneva Convention of 1949) shows, how punishment for military success strategy undermines incentives of army officers, making the military machine virtually inoperative. Artificially abridged Army capability provides the argument for the notion war is no solution. The set of the governments credibly ready to obey ratified Convention, are clearly segmented on two subsets. The 1st one includes the Governments bearing military responsibilities, military umbrella-givers, which abstained to impose all Protocol caused risks on the army officers (non-ratified – USA, Israel; ratified with strong reservations – UK, France, Germany) and the rest democratic countries – which are military umbrella-takers, ratified the Protocol without significant reservations. Statistical analysis of Great Powers military spending historical trends used to test the main hypothesis. Preliminary statistical analysis fails to reject it. We believe bureaucratic competition for the responsibilities, staff and the budget provides satisfactory explanation of this phenomena.

: (Democracy of 'Taxation-Redistribution' and Peacetime Budget Deficit)

Russian Abstract: В ряде работ (Aidt et al, 2006; Funk, Guthmann, 2006 и др.) показана связь между введением всеобщего избирательного права и ростом государственных расходов. Исторически рост расходов был реализован вследствие появления на политической арене мощных левых партий. Эти партии открыто выступали за приоритет функций государственной опеки и помощи (от колыбели до могилы) над поставкой чистых общественных благ. Последние Ф.Лассаль презрительно назвал функцией ночного сторожа. Мы попытались проверить гипотезу о том, что рост расходов на заботу оказался сопряжен с хроническими проблемами современных государственных финансов: бюджетным дефицитом, государственным долгом и инфляцией. Отдельно рассмотрен этический аспект проблемы: стимулы отказываться от собственных трудовых усилий, снимать с себя ответственность, возлагая ее на третьих лиц и использование мощи государства для насильственного перераспределения ресурсов созданных постепенно тающим меньшинством. Принципиальная возможность и желательность выхода из ловушки всеобщего избирательного права показана также и на исторических примерах 1990-х гг.Наиболее естественным был бы такой выход при переходе от авторитарного режима (когда номинальное всеобщее избирательное право фактически почти полностью обесценено) к демократическому. English Abstract: The link between an introduction of the universal suffrage and the growth of government spending has been established in some literature (Meltzer, Richard, 1981, Aidt et al., 2006, Funk and Guthmann, 2006). In this article we try to identify a more detailed mechanism behind that link. So, we addressed to the conflict of interest of bureaucrats, and of the state subsidy beneficiaries. Universal suffrage became integral part of modern democracies' constitutions. Wrong incentives caused by conflict of interests, reproduce consequences, predicted by J.Adams and J.Calhoun long ago. Historically the growth of government spending might be traced to the emergence of mainstream Left parties, which openly stood in favor of the nanny state and government help from the cradle to the grave as a priority over the provision of pure public goods. Finally we check the hypothesis that the growth of government care correlates with the chronic illnesses of the modern state finance like budget deficit, state debt and inflation. Cases of 1990-ties prove principal feasibility of escape from Universal Suffrage trap during post-authoritarian transition (as in the start point the nominal voting franchise actually means almost zero chance to influence the government).

Democracy of 'Taxation-Redistribution' and Peacetime Budget Deficit

The link between an introduction of the universal suffrage and the growth of government spending has been established in some literature (Meltzer, Richard, 1981, Aidt et al., 2006, Funk and Guthmann, 2006). In this article we try to identify a more detailed mechanism behind that link. So, we addressed to the conflict of interest of bureaucrats, and of the state subsidy beneficiaries. Historically the growth of government spending might be traced to the emergence of mainstream left parties, which openly stood in favor of the nanny state and government help from the cradle to the grave as a priority over the provision of pure public goods. Finally we check the hypothesis that the growth of government care correlates with the chronic illnesses of the modern state finance like budget deficit, state debt and inflation.

A Rationale for Non-Monotonic Group-Size Effect in Repeated Provision of Public Goods

This paper analyzes the impact of a group-size change on contributing incentives in repeated provision of pure public goods. We develop a model in which the group members interact repeatedly and might be temporarily unable to contribute to the public good production in some periods. We show that an increase in the group size generates two opposite effects -- the standard free-riding effect, which suppresses cooperation, and the novel large-scale effect, which enhances cooperation. Our results indicate that the former effect dominates in relatively large groups while the latter dominates in relatively small groups. We provide therefore a rationale for non-monotonic group-size effect which may explain the previous empirical and experimental findings.

How Safe Is It, to Confuse Defense with Care?

The state spending structure – correlation on pure and mixed public goods reflects the making of fundamental choices about state functions. Are pure public good defense normal quality provision compatible in Long Run with heavy spending on social sector (i.e. compatible with mixed public goods provision)? The main hypotheses tested: elected politicians and bureaucrats' have strong incentives to choose wrong strategies in foreign and military policies if the state extends its responsibility far from the pure public goods provision limits. The case study (Protocol 1, June 8, 1977, to the Geneva Convention of 1949) shows, how punishment for military success strategy undermines incentives of army officers, making the military machine virtually inoperative. Artificially abridged Army capability provides the argument for the notion war is no solution. The set of the governments credibly ready to obey ratified Convention, are clearly segmented on two subsets. The 1st one includes the Governments bearing military responsibilities, military umbrella-givers, which abstained to impose all Protocol caused risks on the army officers (non-ratified – USA, Israel; ratified with strong reservations – UK, France, Germany) and the rest democratic countries – which are military umbrella takers, ratified the Protocol without significant reservations. Statistical analysis of Great Powers military spending historical trends used to test the main hypothesis. Preliminary statistical analysis fails to reject it. We believe bureaucratic competition for the responsibilities, staff and the budget provides satisfactory explanation of this phenomena.

Efficiency in the provision of pure public goods by private citizens

This paper raises an old question and proposes a new answer. The question is, “Must public goods be produced by governments?” The consensus answer is “Yes,” on the grounds that transaction costs related to group size prevent all potential consumers of a public good from entering into voluntary arrangements to produce efficient levels of that good. Government intervention thus is required to achieve efficiency.

Edgeworth and Lindahl?Foley equilibria of a General Equilibrium Model with Private Provision of Pure Public Goods

In this paper, we propose a definition of Edgeworth equilibrium for a private ownership production economy with (possibly infinitely) many private goods and a finite number of pure public goods. We show that Edgeworth equilibria exist whatever be the dimension of the private goods space and can be decentralized, in the finite and infinite dimensional cases, as Lindahl–Foley equilibria. Existence theorems for Lindahl–Foley equilibria are a by-product of our results.

The public and private provision of pure public goods and the distortionary effects of income taxation: a political economy approach

Abstract A pure public good is provided by the government and the voluntary contributions of two types of households. The government finances its contribution by means of income taxation. The latter has distortionary effects. A third type of household never makes contributions. We analyse the effects of changes in the income tax rate on (a) the provision of the public good, (b) the private contributions of the households, and (c) changes in the distribution of income and welfare between contributing and non‐contributing households. We derive a simple and testable condition under which the lowering of the income tax entails a Pareto improvement.

Revocable commitments to public goods provision under the real‐time protocol of play

AbstractUsing the real‐time protocol of play—a relatively new experimental mechanism in which the order of play and timing of decisions are determined endogenously—we investigate voluntary contributions to the provision of pure public goods. We consider the case where the good is binary, players are asymmetric, communication is prohibited, and all‐or‐none contributions to the public good can be withdrawn at any time during the round of play. Our results: (1) support an equilibrium in which contributors maximize the sum of their own payoffs; (2) show considerably higher levels of contribution than under the more commonly used simultaneous protocol of play; and (3) exhibit no decrease in level of contribution across multiple iterations of the stage game. On comparing our results to those of Goren et al. (2003), we conclude that modifying the mechanism so that contributions once made cannot be revoked yields significantly higher levels of contribution over the course of the game. Copyright © 2003 John Wiley & Sons, Ltd.

The Optimal Provision of Services in National Parks

Abstract A national park provides recreational opportunities and also provides a pure public good. This paper presents an intergenerational model in which a club good and a pure public good are provided jointly. The focus is on optimality conditions for services provided by park managers. At the margin, the cost of providing the services should be balanced by the benefits of services. Services can directly enhance visitor enjoyment, both immediately and in the future; they can also affect congestion currently and in the future; they can affect the quality of park resources; and they can affect the pure public good provision. The framework developed in this paper suggests what information should be used by the National Park Service when deciding on the level and kind of services to provide.

Pareto-Improving Redistribution and Pure Public Goods

Abstract In the pure public good model, the Nash equilibrium associated with one initial income distribution may Pareto dominate the equilibrium associated with another distribution of the same aggregate income. We explore this possibility and examine its implications for Pareto-improving policy intervention by undertaking a comparative static analysis of Pareto-improving tax-financed increases in pure public good provision. Under some circumstances, a government can engineer policies that raise public good provision while increasing the well-being of contributors and noncontributors. Crucial factors promoting this outcome involve a large number of noncontributors, a high marginal valuation for the public good by non-contributors and a large aggregate response of contributors to changes in their income.

Rethinking Federalism

The appropriate federal structure of government is now a policy issue of major debate. This paper identifies three approaches and compares their strengths and weaknesses. Economic federalism recommends the use of competitive communities for the provision of congestible local goods and a strong central government for the provision of pure public goods and spillovers. Cooperative federalism recommends intercommunity agreements; democratic federalism prefers a majority-rule representative legislature. Efficiency will sometimes conflict with other constitutional objectives--political participation and the protection of rights--and compromises will often be required.

Why Existence Value Should Be Used in Cost-Benefit Analysis

The article by Rosenthal and Nelson [1992] (hereafter RN) is intended to stimulate questions among economists and policy makers about incorporating existence values in certain public policy deliberations. These deliberations are those that seek to value the costs and benefits of particular public policies and those that serve to define damages to natural resources resulting from releases of hazardous substances or oil.' RN's evaluation of existence value follows a scattershot school of argumentation that I believe admits irrelevant and often contradictory propositions. These propositions range from the view that existence value is an ill-defined concept, to the statement that all things have existence value to someone (a seemingly concrete statement for an ill-defined concept). RN conclude that even if existence value were an appropriate component of a cost-benefit study or a natural resource damage award, we do not possess tools that can reliably measure existence value-and if we did have the tools, the task would be unmanageable anyway. In this article I address the arguments put forth by RN about existence value, cost-benefit studies, and damage awards, but my purpose is broader. I believe it is safe to say that RN are not suggesting that existence values are an illusion. They would surely agree that these values are real; that they are held by some people; and that, if the objects giving rise to these values are diminished, the well-being of these people is similarly diminished. Rather, the authors seem to be arguing that existence values are too poorly defined at present to be readily incorporated into cost-benefit studies and are difficult to measure. To discuss the definitional problems with existence values, I will place them in the context of neoclassical welfare theory and suggest that the issues raised by RN come up whenever we examine decisions about the provision of pure public goods. I hope to convince the reader that if, as economists, we can treat pure public goods within a welfare theoretic structure, we can treat existence value within the same structure. Moreover, excluding existence value from cost-benefit studies and legal proceedings would necessitate a similar exclusion of all treatments of public goods.

Free riding and uncertainty

This paper examines the effects of uncertainty on pure public good provision and free-riding behavior. Two models are presented. In the first, Nash behavior is assumed and uncertainty is with respect to the contributions of the rest of the community. For the second model, non-Nash behavior is assumed and uncertainty concerns the nonzero response that a representative individual's optimizing choice will cause in the community. Propositions provide sufficient conditions for increased risk to worsen free-riding behavior in the two models. For Nash behavior, we also give the sufficient condition for increased risk to ameliorate free-riding behavior. The effects of group size on free riding are also explored for uncertain responses by the community.