Economic Theory

, Volume 37, Issue 1, pp 51–80

Private provision of a discrete public good: efficient equilibria in the private-information contribution game

Research Article

DOI: 10.1007/s00199-007-0283-y

Cite this article as:
Barbieri, S. & Malueg, D.A. Econ Theory (2008) 37: 51. doi:10.1007/s00199-007-0283-y

Abstract

We study the voluntary provision of a discrete public good via the contribution game. Players independently and simultaneously make nonrefundable contributions to fund a discrete public good, which is provided if and only if contributions cover the cost of production. We characterize nonconstant continuous symmetric equilibria, giving sufficient conditions for their existence. We show the common normalization by which players’ values are distributed over [0, 1] is not without loss of generality: if the distribution over this interval has continuous density f with f(0) >  0, then no (nonconstant) continuous symmetric equilibrium exists. We study in detail the case in which players’ private values are uniformly distributed, showing that, generically, when one continuous equilibrium exists, a continuum of continuous equilibria exists. For any given cost of the good, multiple continuous equilibria cannot be Pareto ranked. Nevertheless, not all continuous equilibria are interim incentive efficient. The set of interim incentive efficient equilibria is exactly determined.

Keywords

Discrete public good Contribution game Interim incentive efficiency 

JEL Classification Numbers

H41 D61 D82 

Copyright information

© Springer-Verlag 2007

Authors and Affiliations

  1. 1.Department of EconomicsTulane UniversityNew OrleansUSA
  2. 2.Department of EconomicsUniversity of California-RiversideRiversideUSA

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