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Individual Responsibility and the Funding of Collective Goods

Author

Listed:
  • Louis Lévy-Garboua

    (TEAM - Théories et Applications en Microéconomie et Macroéconomie - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Claude Montmarquette

    (Université de Montréal - Département de Sciences Economique - UdeM - Université de Montréal)

  • Marie Claire Villeval

    (GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique)

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.
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Suggested Citation

  • Louis Lévy-Garboua & Claude Montmarquette & Marie Claire Villeval, 2005. "Individual Responsibility and the Funding of Collective Goods," Post-Print halshs-00176718, HAL.
    • Handle: RePEc:hal:journl:halshs-00176718
    as

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    References listed on IDEAS

    as
    1. Chan, Kenneth S. & Mestelman, Stuart & Muller, R. Andrew, 2008. "Voluntary Provision of Public Goods," Handbook of Experimental Economics Results, in: Charles R. Plott & Vernon L. Smith (ed.), Handbook of Experimental Economics Results, edition 1, volume 1, chapter 88, pages 831-835, Elsevier.
    2. Sefton, Martin & Steinberg, Richard, 1996. "Reward structures in public good experiments," Journal of Public Economics, Elsevier, vol. 61(2), pages 263-287, August.
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    5. Kenneth Chan & Stuart Mestelman & Robert Moir & R. Muller, 1999. "Heterogeneity and the Voluntary Provision of Public Goods," Experimental Economics, Springer;Economic Science Association, vol. 2(1), pages 5-30, August.
    6. Keser, Claudia, 1996. "Voluntary contributions to a public good when partial contribution is a dominant strategy," Economics Letters, Elsevier, vol. 50(3), pages 359-366, March.
    7. Goeree, Jacob K. & Holt, Charles A. & Laury, Susan K., 2002. "Private costs and public benefits: unraveling the effects of altruism and noisy behavior," Journal of Public Economics, Elsevier, vol. 83(2), pages 255-276, February.
    8. Andreoni, James, 1993. "An Experimental Test of the Public-Goods Crowding-Out Hypothesis," American Economic Review, American Economic Association, vol. 83(5), pages 1317-1327, December.
    9. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    10. Kirchsteiger, Georg & Puppe, Clemens, 1997. "On the possibility of efficient private provision of public goods through government subsidies," Journal of Public Economics, Elsevier, vol. 66(3), pages 489-504, December.
    11. Willinger, Marc & Ziegelmeyer, Anthony, 1999. "Framing and cooperation in public good games: an experiment with an interior solution," Economics Letters, Elsevier, vol. 65(3), pages 323-328, December.
    12. Tatsuyoshi, S. & Nakamura, H., 1995. "The 'Spite' Dilema in Voluntary Contribution Mechanism Experiments," ISER Discussion Paper 0370, Institute of Social and Economic Research, Osaka University.
    13. Roberto Burlando & Francesco Guala, 2005. "Heterogeneous Agents in Public Goods Experiments," Experimental Economics, Springer;Economic Science Association, vol. 8(1), pages 35-54, April.
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    More about this item

    Keywords

    collective goods; taxation; rationing; responsibility; interior optimum; experiment;
    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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