Comment on R. Pethig: “Free Riders and Voluntary Contributions Reconsidered”

Abstract

Rüdiger Pethig presents an illuminating new procedure for revealing the demand for public goods. His contribution is a very valuable one in an important and growing field of research. His proposal can be evaluated from a normative and a positive point of view, normative in the sense of what rule should be applied for eliciting undistorted demands for public goods, and positive in the sense of explaining why institutions supplying public goods can survive. Let me first address the normative problem and then turn to the positive one. What should a lobby manager do to reduce free riding for the services he produces? Pethig proposes that he should levy uniform dues upon the members of the organization. Uniform membership-dues imply (according to Pethig) an all-or-nothing choice and therefore give more of an incentive to the individuals to participate in the financing of a public good than e.g. voluntary provision. All-or-nothing choice increases the detrimental effects of free riding for an individual and therefore makes such a behavior less attractive.