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Crowdfunding defense

Abstract

National defense is the hard case for the voluntary provision of public goods because without recourse to taxation it is difficult to overcome the free-rider problem, much less provide defense superior to that of government provision because of the large costs associated with national security and war-making. The theoretical explanations for how collective action problems can be solved privately generally have not been brought to bear on national defense, despite being applied to other public goods. I use the theoretical solutions to the collective action problem provided by Olson to understand the extensive private provision of national defense by Ukrainian citizens in their war against Russian-backed separatists. By reducing the size of the population in question and focusing on uniquely high return types of military capital, private defense charities attracted donations sufficient to supply critical funding and military materiel in places the Ukrainian government had failed to do so.

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Acknowledgements

I thank three anonymous referees, editors William F. Shughart II and Peter Leeson, Christopher J. Coyne, Bryan Cutsinger, Ennio Piano, and Linan Peng for their helpful comments.

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Correspondence to Garrett R. Wood.

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Wood, G.R. Crowdfunding defense. Public Choice 180, 451–467 (2019). https://doi.org/10.1007/s11127-019-00648-w

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  • DOI: https://doi.org/10.1007/s11127-019-00648-w

Keywords

  • Public goods
  • Voluntary provision
  • Crowdfunding
  • National defense

JEL Classification

  • D74
  • D82
  • D83