Equilibrium Existence and Uniqueness in Public Good Models: An Elementary Proof via Contraction

This paper presents a proof for existence and uniqueness of a Nash equilibrium of a public good model that exploits a simple contraction mapping. The proof establishes both existence and uniqueness in a single exercise that provides intuition about sufficiency. The method of proof is applied not only to the basic pure public good model but also to the impure model. In the latter model, income normality does not play the same pivotal role for existence and uniqueness.     

PUBLIC RADIO STATIONS ARE REALLY, REALLY NOT PUBLIC GOODS: Charitable contributions and impure altruism

This paper applies the censored regression model under several distributional assumptions to data on charitable giving to public radio stations. The authors show that charitable contributions are positively affected by the level of use of a pure public good. Wing this factor into account they additionally show thd contributions to public radio do not support the public good hypothesis, but rather donors behave as impure altruists.     

Revisiting the impact of impure public goods on consumers’ prosocial behavior: A lab experiment in Shanghai

In this study, we implemented a dictator game experiment to examine how the increase of the public characteristic in an impure public good affects individuals’ prosocial behaviour. A within‐subject design was used in the experiment. The dictator game was repeated six times with an impure public good introduced in four of them. We observe that the increase of the public characteristic in an impure public good partly crowds out individuals’ subsequent donations, which could be explained by a seemingly ‘mental accounting’ mental process. In addition, we also find that the selfish behaviour of individuals in dictator games with impure public goods, to some extent, has an inertia influence on their subsequent donations when the impure public good is removed.     

A generalized impure public good and linear characteristics model of green consumption

This paper provides a general framework for understanding consumer behavior related to goods and services that may be considered environmentally friendly, ethically produced, fairly traded, or some combination thereof. We generalize the impure public good model and derive its comparative static properties. The model accounts for any number of impure public (green) goods and joint production of any number of both private and public characteristics. The generalization provides a bridge between the impure public good model and the well-known linear characteristics model, both of which are special cases of the model developed here. The results show how demand for green goods and characteristics such as environmental quality depends on wealth, exogenously given levels of public goods, and the technologies of joint production. The effects of changes in technology depend critically on whether jointly produced characteristics are complements or substitutes in consumption. Several of the results are rather counterintuitive and differ in meaningful ways from existing models of impure public goods and linear characteristics. The results also illuminate several reasons for greater caution about whether it is reasonable to assume that green goods and services are necessarily beneficial for the provision of public goods.     

Some Insights on Religion from Public Goods Economics

This paper provides a theoretical discussion on what analytical insight is gained by viewing religion as both a pure and impure public good. It suggests that organized religion converts a public good into an excludable club good and can be viewed as providing both an access regime for this club good as well as acting as an intermediary. Interestingly, this drives a wedge between the ardent and moderate adherents of a religion. It also presents an analysis of trust in social relationships when organized religion works to provide a credible signal of trustworthiness.     

Some Insights on Religion from Public Goods Economics

This paper provides a theoretical discussion on what analytical insight is gained by viewing religion as both a pure and impure public good. It suggests that organized religion converts a public good into an excludable club good and can be viewed as providing both an access regime for this club good as well as acting as an intermediary. Interestingly, this drives a wedge between the ardent and moderate adherents of a religion. It also presents an analysis of trust in social relationships when organized religion works to provide a credible signal of trustworthiness.     

Public Good Provision and Ancillary Benefits: The Case of Climate Agreements

Several studies found ancillary benefits of the provision of public goods to be of considerable size. If these additional private benefits were noticed, they would imply not only higher cooperative but also non-cooperative provision levels. However, beyond these largely undisputed important quantitative effects, there would be qualitative and strategic implications associated with ancillary benefits: public policy would no longer be a pure but an impure public good. In this paper, we investigate these implications in a setting of non-cooperative coalition formation in the context of climate change. In particular, we address the following question. Would ancillary benefits if they were taken in consideration increase participation in international climate agreements and raise the success of these treaties in welfare terms?     

Green Electricity Markets as Mechanisms of Public-Goods Provision: Theory and Experimental Evidence

Utility-based green electricity programs provide market opportunities for consumers to reduce the carbon footprint of their electricity use. These programs deploy three types of public-goods contribution mechanisms: voluntary contribution, green tariff, and all-or-nothing green tariff (Kotchen and Moore, 2007). We extend the theoretical understanding of the all-or-nothing green tariff mechanism by showing that an assumption of warm-glow preferences is needed to explain widespread participation in programs deploying this mechanism. We conduct the first experimental test to compare the revenue generating capacity of a pure public good (based on the voluntary contribution mechanism) and an impure public good (based on the green tariff mechanism). In experimental play, the voluntary contribution mechanism raises 50% more revenue than the green tariff mechanism. With the all-or-nothing green tariff, experimental play and regression estimates show that a warm-glow preference positively affects participation, as predicted by the theory.     

Offset carbon emissions or pay a price premium for avoiding them? A cross-country analysis of motives for climate protection activities

This article contributes to the economic literature on pure and impure public goods by considering two alternatives for contributing to the public good climate protection: offsetting carbon emissions from conventional consumption or paying higher prices for climate-friendly products. We empirically examine a wide range of motives and their impact on individuals’ choice in favour of these two alternatives relying on data from representative international surveys. Our results indicate that environmental awareness, warm glow motives and the desire to set a good example have the most robust effects on both climate protection activities in Germany and the United States. However, some motives differ considerably between both alternatives and the two countries. A green identity enhances the willingness to pay a price premium for climate-friendly goods or services in Germany, while social norms seem to be of much higher relevance in the United States. Our results further suggest that the choice of climate protection activities, especially of carbon offsetting, entails a high degree of uncertainty.     

An analysis of differing abatement incentives

In general, climate policies are evaluated with respect to their costs and benefits. But regularly an important category of benefits is omitted: ancillary or secondary benefits. In contrast to the main strand of literature on climate change the study presented here will analyze countries’ decisions on greenhouse gas abatement in an impure public good model which considers ancillary benefits. As can be shown by integrating ancillary benefits into the analysis, environmental regulations independent of the climate problem may well have an effect on countries’ greenhouse gas control. Consequently, different environmental programs should be coordinated carefully and should not be considered as being independent.     

Best-shot network games with continuous action space

This paper presents a model of public good provision in networks where the level of public good that an agent has access to depends on the maximum of contributions by the agents in her neighbourhood. Our analysis shows that the game always has an equilibrium in pure strategies and all equilibria are specialised and stable. Welfare analysis shows that formation of new links in a prevailing network may not always be useful.     

Pareto-Improving Redistribution and Pure Public Goods

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 non-contributors. Crucial factors promoting this outcome involve a large number of non-contributors, a high marginal valuation for the public good by non-contributors and a large aggregate response of contributors to changes in their income.     

Aggregative Public Good Games

We exploit the aggregative structure of the public good model to provide a simple analysis of the voluntary contribution game. In contrast to the best response function approach, ours avoids the proliferation of dimensions as the number of players is increased, and can readily analyze games involving many heterogeneous players. We demonstrate the approach at work on the standard pure public good model and show how it can analyze extensions of the basic model.     

Does Government Expenditure Crowd Out Private Consumption in Italy? Evidence from a Microeconomic Model

An abnormal expansion of the public sector may create serious problems to the market economy, as the literature suggests. This issue is quite important in countries such as Italy where the size of the public sector and of its debt are quite relevant. In this paper a model, in the microeconomic tradition, is developed and applied to the italian economy using a quite general utility function to represent consumer's behaviour. The aim of the article is to set up a methological framework in which to test for the hypothesis that the provision of public and impure public goods crowds out private consumption. The main result of the analysis is that, in Italy, traditional public goods play a neutral role in expenditure decisions while impure public goods crowd out private consumption. This crowding out is created by over-production of these services; merit goods are direct complements to a wide range of private goods, but this beneficial effect is more than offset by the negative income effect related to their financing.     

Pork versus public goods: an experimental study of public good provision within a legislative bargaining framework

We experimentally investigate a legislative bargaining model with both public and particularistic goods. Consistent with the qualitative implications of the model: there is near exclusive public good provision in the pure public good region, in the pure private good region minimum winning coalitions sharing private goods predominate, and in the “mixed” region proposers generally take some particularistic goods for themselves, allocating the remainder to public goods. As in past experiments, proposer power is not nearly as strong as predicted, resulting in public good provision decreasing in the mixed region as its relative value increases, which is inconsistent with the theory.     

Effects of Technology Transfers on the Provision of Public Goods

In this paper, we examine the viability ofcooperative policies oriented to the resolution oftransboundary pollution problems using the theory ofprivate provision of public goods in a two-countrymodel. We analyze the effects on economic welfare ofvoluntary technological transfers oriented to reducingthe emission of pollutants.Our analysis shows that when the atmosphere istaken as a pure public goods, ``a strong paradox' emerges:the advanced country, in spite of the transfer, seesits economic welfare improved while the developingcountry sees it worsen. Moreover, if both a technicaland an income transfer occur, this paradox mightnot be solved. Furthermore, ``a paradoxicalimprovement' occurs when the advanced country does nottake any policy towards the environment but thedeveloping country does: an improvement in the levelof technology in the developing country allows for anexpansion of the level of utility in both countries.On the other hand, in the case where the atmosphere istaken as an impure public goods, when both countriespursue an abatement policy, the transfer of technologyleads to an improvement in welfare in bothcountries.     

Congested public goods: The case of fire protection

This paper uses a fire protection measure based on a community's fire insurance rating to estimate the strength of congestion effects for fire protection services. The empirical results show that the congestion properties of fire protection are much like those of a pure public good. In addition, the paper introduces a new notion of returns to scale for public goods and estimates the relevant parameters for the fire protection case.     

Wealth inequality and collective action

We study the effect of inequality in the distribution of endowments of private inputs (e.g., land, wealth) that are complementary in production with collective inputs (e.g., contribution to public goods such as irrigation and extraction from common-property resources) on efficiency in a class of collective action problems. We focus on characterizing the joint surplus maximizing level of inequality, making due distinction between contributors and non-contributors, in a framework that allows us to consider a wide variety of collective action problems ranging from pure public goods to impure public goods to commons. We show that while efficiency increases with greater equality within the groups of contributors and non-contributors, so long the externalities (positive or negative) are significant, there is an optimal degree of inequality between these groups.     

PRIVATE PROVISION OF PUBLIC GOODS AND INFORMATION DIFFUSION IN SOCIAL GROUPS

I describe a dynamic model of costly information sharing where private information affecting collective‐value actions is transmitted by social proximity. Individuals make voluntary contributions toward the provision of a pure public good, and information transmission about quality of provision is a necessary condition for collective provision to take place in a stationary equilibrium. I show that unlike in the case of private goods, better informed individuals face positive incentives to incur a cost to share information with their neighbors and that these incentives are stronger and provision of the pure public good greater the smaller are individuals' social neighborhoods.     

Social norms and gift behavior: Theory and evidence from Romania

In many developing and transitional countries with limited public income redistribution, inter-household transfers in general, and gifts in particular, are sizable and very important. We use unique Romanian survey data that enables us to isolate pure gifts from other private transfers. We explicitly focus on the importance of community-wide social norms, and find that they indeed play a major role for both the occurrence and the values of gifts. More exactly, our results suggest that the overall predominant gift motive among Romanian households is a norm of reciprocity. Moreover, this norm seems to be dominating for gifts to middle- and high-income households. Even though poor households receive to the same extent, norms of both impure altruism and reciprocity tend to be important. Hence, although the poor may not reciprocate gifts to the same extent as the rich, they still receive, since there is a social norm to give, especially to the poor.