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Lotteries and Lindahl prices in public good provision

Author

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  • Jörg Franke
  • Wolfgang Leininger

Abstract

Lotteries are traditional instruments for fundraising in general. Morgan has shown that they can also be very effective in the provision of a public good. However, a fair lottery can only enhance provision but never result in the efficient amount. Franke and Leininger show how—by borrowing from optimal contest theory—biased lotteries can provide the efficient amount of the public good. This paper aligns this result with standard public good theory, in particular the classic notion of Lindahl pricing. It shows that biased lotteries can—implicitly—implement Lindahl pricing of the public good in noncooperative Nash equilibrium.

Suggested Citation

  • Jörg Franke & Wolfgang Leininger, 2018. "Lotteries and Lindahl prices in public good provision," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(6), pages 840-848, December.
    • Handle: RePEc:bla:jpbect:v:20:y:2018:i:6:p:840-848
    DOI: 10.1111/jpet.12307
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    Cited by:

    1. Christopher Oconnor & Li Zhang & Cary Deck, 2022. "An examination of the effect of inequality on lotteries for funding public goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(4), pages 733-755, August.
    2. Liu, Tracy Xiao & Lu, Jingfeng & Wang, Zhewei, 2022. "Efficient public good provision by lotteries with nonlinear pricing," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 680-698.
    3. Daske, Thomas, 2019. "Efficient Incentives in Social Networks: "Gamification" and the Coase Theorem," EconStor Preprints 193148, ZBW - Leibniz Information Centre for Economics.

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