A voting model for the allocation of public goods: Existence of an equilibrium

It is well known that equilibria may not exist for majority voting over multidimensional policy spaces. This paper shows that certain institutional constraints can be imposed upon the voting process to ensure existence of a restricted equilibrium. A restricted equilibrium point must defeat only those points connected to it by one of an exogenously given set of linearly independent voting vectors. Using this procedure in a general equilibrium model to determine demands for public goods, existence of a general political equilibrium is proven. The equilibrium need not be Pareto optimal and may be manipulated by changing the vectors.     

Ambiguity on audits and cooperation in a public goods game

We investigate the impact of various audit schemes on the provision of public goods, when contributing less than the average of the other group members is centrally sanctioned and the probability of an audit is unknown. We study how individuals update their beliefs about the probability of being audited, both before and after audits are permanently withdrawn. We find that when individuals have initially experienced systematic audits, they decrease both their beliefs and their contributions almost immediately after audits are withdrawn. In contrast, when audits were initially less frequent and more irregular, they maintain high beliefs and continue cooperating long after audits have been withdrawn. This identifies the compliance effect of irregularity and uncertainty due to learning difficulties. By increasing both the frequency of audits and the severity of sanctions, we also identify an educative effect of frequent and high sanctions on further cooperation.     

Proportional income taxes and cores in a public goods economy

An equivalence relationship between cores and Pareto optimal allocations of a public goods economy where the public goods are to be provided through a proportional income tax is presented. For this purpose, the definition of the core is modified by allowing coalitions to tax their complements at any given rate. Also, a certain rule which specifies the rate is introduced.     

Distributive politics of public goods networks through multistage voting

Public goods networks create conflict between districts needing the network and districts that pay the costs. Thus, it is difficult for pork barrel politicians to achieve logrolling with other districts. I show that logrolling is possible for such politicians if they set their agenda properly. To show this, I model the centralized decision‐making process as a multistage vote among representatives from different districts. I assume the districts are better off if and only if the public good “connects” them to the network. Public goods can be provided universally by setting the agenda properly, even when costs exceed the benefits.     

An experimental dynamic public goods game with carryover

We examine voluntary contributions in a two-stage public good experiment with ‘carryover.’ In two treatments, each subject's second-stage endowment is determined by the return from the public good in the first-stage. We manipulate payoffs across treatments such that, relative to our no-carryover baseline, earnings from either Nash Equilibrium (constant NE) play or Pareto Optimal (constant PO) play are held constant. The remaining two treatments maintain a constant endowment in each stage, but vary the marginal per capita return (MPCR high or MCPR low) to contributions in the second-stage. Our results indicate that carryover increases first-stage contributions. Our implementation of carryover enables us to examine the effects of changing endowments and a wide range of MPCR's. Consistent with the literature, we find that MPCR and endowment effects are important determinants of subject contributions to the group account. While stage 1 contributions tend to increase in the presence of carryover, efficiency levels across both stages fall relative to the baseline. Efficiency levels fall because the maximum earnings possible increase with carryover (due to higher endowments or MPCR levels in stage 2).     

Efficiency and stability of sampling equilibrium in public goods games

Most models of social preferences and bounded rationality that are effective in explaining efficiency‐increasing departures from equilibrium behavior cannot easily account for similar deviations when they are efficiency‐reducing. We show that the notion of sampling equilibrium, subject to a suitable stability refinement, can account for behavior in both efficiency‐enhancing and efficiency‐reducing conditions. In particular, in public goods games with dominant strategy equilibria, stable sampling equilibrium can involve the play of dominated strategies with positive probability both when such behavior increases aggregate payoffs (relative to the standard prediction) and when it reduces aggregate payoffs. The dominant strategy equilibrium prediction changes abruptly from zero contribution to full contribution as a parameter crosses a threshold, whereas the stable sampling equilibrium remains fully mixed throughout. This is consistent with the available experimental evidence.     

A reconciliation between equity and efficiency in public goods economy

Journal of Economics -     

The political economy of public goods: Some evidence from India

We are interested in how public goods get allocated by a centralized state. We use data on public goods and social structure from parliamentary constituencies in rural India to understand the allocation of these goods over the 1970s and 1980s. National policies and political agendas during this period emphasized universal access to basic amenities and financed a rapid expansion in rural infrastructure. We find evidence of considerable equalization in many of these facilities, reflecting perhaps the importance of these commitments. Among the historically disadvantaged social groups, those that mobilized themselves politically gained relative to the others. Measures of social heterogeneity that have been emphasized in the recent empirical literature on public goods are relevant but not overwhelming in their importance.     

论农村公共物品供给中的均衡

自农村改革以来,存在四种农田灌溉均衡:一是税费改革前,乡村组织以收取共同生产费的形式来组织农田灌溉的均衡;二是由村庄强人出面组织农户进行灌溉的均衡;三是既无乡村组织借重国家强制力,也无村庄强人借重私人暴力来抑制搭便车行为,从而形成的以微型水利灌溉为主的均衡;四是以村民小组或村为单位建立用水协会,组织农户灌溉的均衡。在当下中国,由于农民特殊的公正观,乡村组织退出农村公共物品供给领域后,农村很可能普遍出现第二或第三种均衡的糟糕局面。因此,农村公共物品供给,必须以国家强制力为保障,形成国家与村庄之间合作与互补的供给机制。     

Local public goods with mobility: Existence and optimality of a general equilibrium

The existence and optimality of a general equilibrium in a model with a finite number of locations among which the continuum of individuals (each individual belonging to one of a finite number of types) have to choose is investigated. Each community finances its own production of public goods by taxes. The way in which the tax burden in shared among the different types in the different regions is left arbitrary. The model allows for: restrictions on the mobility of either residents and/or workers, congestion and externalities in both production and consumption, commuting costs, preferences of an individual may also depend on his location as well as on the distribution of all individuals across locations.     

Rotating group representatives and group members’ requests in repeated public goods game

ABSTRACT

This study investigated the effect of group representatives on contribution behaviour in response to group members’ requests in repeated public goods games. Data came from 135 students in 15 groups enrolled in the experiment, grouped in the following treatments: no group representatives (NR, NRG) and group representatives (R1, R2). We also tested initial requests wherein the group members’ initial requests (i.e. NRG, R2) mediated the positive relationship between individual-level contribution preferences and group contributions. We used a fixed-effects GLS regression and IV regression to analyse the effect of group representatives and group members’ requests. The results indicated the following: (a) rotating group representative/group members’ requests was related to group contributions at the session (within-members) and group (between-group) levels; (b) the reactions to members’ requests positively predicted group contributions; (c) subjects in the no group representatives treatment formed their requests by relying more on previous group contributions than subjects in the group representatives treatment, who relied more on the previous group members’ requests; and (d) the initial requests explained long-term contribution levels, which resulted in variations in group contributions observed between the NRG and R2 treatments. Our findings highlight the role of rotating group representatives in stimulating cooperation among members, while group members’ requests impel individuals to make contribution decisions at the group level.     

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.     

Centralized versus decentralized provision of local public goods: a political economy approach

This paper takes a fresh look at the trade-off between centralized and decentralized provision of local public goods. It argues that the sharing of the costs of local public spending in a centralized system will create a conflict of interest between citizens in different jurisdictions. When spending decisions are made by a legislature of locally elected representatives, this conflict of interest will play out in the legislature. Depending on precisely how the legislature behaves, the result may be excessive public spending or allocations of public goods characterized by uncertainty and misallocation across districts. The extent of the conflict of interest between districts is affected by spillovers and differences in tastes for public spending. Thus, the relative performance of centralized and decentralized systems depends upon spillovers and differences in tastes for public spending, but for different reasons than suggested in the existing literature.     

Public goods,voting, and growth

We study a parametric politico‐economic model of economic growth with productive public goods and public consumption goods. The provision of public goods is funded by a proportional tax. Agents are heterogeneous in their initial capital endowments, discount factors, and the relative weights of public consumption in overall private utility. They vote on the shares of public goods in gross domestic products (GDP). We propose a definition of voting equilibrium, prove the existence and provide a characterization of voting equilibria, and obtain a closed‐form solution for the voting outcomes. Also we introduce a “fictitious” representative agent and interpret the outcome of voting as a choice made by a central planner for his benefit. Finally, we undertake comparative static analysis of the shares of public goods in GDP and of the rate of balanced growth with respect to the discount factors and the preferences for public consumption. The results of this analysis suggest that the representative‐agent version of our model is capable of capturing the interaction between many voting heterogeneous agents only if the heterogeneity is one‐dimensional.     

Common fate,game harmony and contributions to public goods: experimental evidence

We experimentally study the effects of common fate on voluntary contributions to linear public goods. In each period, earnings are assigned to subjects according to the outcome of a lottery. In ‘common fate’, ‘independent fate’ and ‘rival fate’ treatments, the lottery outcomes of group members are (respectively) positively correlated, stochastically independent and negatively correlated. We observe the highest contributions and strongest reciprocity under common fate. Contrary to the game harmony hypothesis, contributions are not lower under rival fate than under independent fate. Surprisingly, under rival fate, having won the lottery in one period induces higher contributions in the next period.