Coordination and free-riding problems in the provision of multiple public goods

Ai Takeuchi and Erika Seki

Journal of Economic Behavior & Organization, 2023, vol. 206, issue C, 95-121

Abstract: This study considers the twin problems of free riding and coordination failure, which are prevalent in the provision of multiple public goods with diminishing marginal returns. Specifically, we consider a game with two public goods, each of which has an upper bound of effective contribution. Any costly contributions beyond the upper bound are wasted. In this game, the payoff-sum maximizing Pareto-optimal outcome requires the sum of contributions by the group members to be equal to the upper bound of each public good, resulting in a coordination problem regarding who contributes to which public good. We theoretically and experimentally examine whether the provision of information on the values of the upper bounds helps overcome these problems and improves efficiency. Theoretical analysis predicts that this information will improve efficiency because it prompts efficiency-concerned individuals to match the upper bounds of each public good in equilibrium. The experimental results show countervailing effects of providing information; namely, it improves coordination but exacerbates the free-riding problem.

Keywords: Charity; Free riding; Coordination; Multiple public goods; Laboratory and online experiment; Information (search for similar items in EconPapers)
JEL-codes: C72 C91 C92 H41 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Coordination and free-riding problems in the provision of multiple public goods (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:206:y:2023:i:c:p:95-121

DOI: 10.1016/j.jebo.2022.11.022

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