Dynamic Voluntary Provision of Public Goods and Optimal Steady-State Subsidies

This paper examines a differential game model of voluntary provision of a public good in which private agents' contributions accumulate over time and derives subsidy rules that achieve the socially efficient steady state. It is shown that the optimal subsidy rule is a simple one when agents use the open‐loop strategy, while under Markovian strategies it intricately depends on the parameters of the economy.