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Individual Responsibility and the Funding of Collective Goods

Author

Listed:
  • Louis Lévy-Garboua
  • Claude Montmarquette
  • Marie Claire Villeval
Abstract
When a deficit occurs in the funding of collective goods, it is usually covered by raising the amount of taxes or by rationing the supply of the goods. This article compares the efficiency of these institutions. We report the results of a 2x2 experiment based on a game in the first stage of which subjects can voluntarily contribute to the funding of a collective good that is being used to compensate the victims of a disaster. In the second stage of the game, in case of a deficit, we introduce either taxation or rationing. Each treatment is subjected to two conditions: the burden of the deficit is either uniform for all the subjects, or individualized according to the first-stage contribution. We show that the individualized treatments favor the provision of the collective good through voluntary cooperation whereas the uniform treatments encourage free-riding. Individualized taxation brings the voluntary contributions closer to the optimum while uniform rationing appears to be the worst system since free-riding restrains the provision of the good. Un déficit dans le financement d'un bien collectif est généralement couvert soit par un accroissement des impôts, soit par un rationnement des usagers. Cet article compare l'efficacité de ces institutions. Nous présentons les résultats d'une expérience de laboratoire qui s'appuie sur un jeu dans la première étape duquel les sujets peuvent contribuer volontairement au financement d'un bien collectif destiné à indemniser les victimes d'un dommage. Dans la deuxième étape du jeu, en cas de déficit, nous introduisons soit un impôt, soit un rationnement. Chaque traitement est soumis à deux conditions: la prise en charge du déficit est soit uniforme pour tous les sujets, soit individualisée en fonction de la contribution volontaire du sujet en première étape. Nous montrons que les traitements individualisés favorisent la provision du bien collectif grâce à la coopération volontaire, alors que les traitements uniformes encouragent le comportement de passager clandestin. L'impôt individualisé rapproche les contributions volontaires de l'optimum, tandis que le rationnement uniforme est la pire institution puisque le comportement de passager clandestin restreint la provision du bien.

Suggested Citation

  • Louis Lévy-Garboua & Claude Montmarquette & Marie Claire Villeval, 2007. "Individual Responsibility and the Funding of Collective Goods," CIRANO Working Papers 2007s-18, CIRANO.
    • Handle: RePEc:cir:cirwor:2007s-18
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Collective goods; taxation; rationing; responsibility; interior optimum; experiment.; bien collectif; fiscalité; rationnement; responsabilité; optimum intérieur; experience.;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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