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The second-order dilemma of public goods and capital accumulation

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  • Akira Okada

Abstract

The second-order dilemma of public goods arises from individuals' incentive to free ride on a mechanism to solve the provision problem (first-order dilemma) of public goods. Without relying on social and behavioral arguments, we show by a voluntary participation game that the accumulation of public goods can mitigate the second-order dilemma in the long run. The analysis also shows that population decrease damages the accumulation of public goods.
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Suggested Citation

  • Akira Okada, 2008. "The second-order dilemma of public goods and capital accumulation," Public Choice, Springer, vol. 135(3), pages 165-182, June.
    • Handle: RePEc:kap:pubcho:v:135:y:2008:i:3:p:165-182
    DOI: 10.1007/s11127-007-9252-z
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    References listed on IDEAS

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    1. Palfrey, Thomas R. & Rosenthal, Howard, 1984. "Participation and the provision of discrete public goods: a strategic analysis," Journal of Public Economics, Elsevier, vol. 24(2), pages 171-193, July.
    2. 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.
    3. Okada, Akira, 1993. "The Possibility of Cooperation in an n-Person Prisoners' Dilemma with Institutional Arrangements," Public Choice, Springer, vol. 77(3), pages 629-656, November.
    4. Andreoni, James, 1988. "Privately provided public goods in a large economy: The limits of altruism," Journal of Public Economics, Elsevier, vol. 35(1), pages 57-73, February.
    5. Dorsey, Robert E, 1992. "The Voluntary Contributions Mechanism with Real Time Revisions," Public Choice, Springer, vol. 73(3), pages 261-282, April.
    6. Paul Pecorino & Akram Temimi, 2007. "Public good provision in a repeated game: The role of small fixed costs of participation," Public Choice, Springer, vol. 130(3), pages 337-346, March.
    7. Andreu Mas-Colell, 1980. "Efficiency and Decentralization in the Pure Theory of Public Goods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(4), pages 625-641.
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    Cited by:

    1. Akira Okada, 2015. "Cooperation and Institution in Games," The Japanese Economic Review, Japanese Economic Association, vol. 66(1), pages 1-32, March.
    2. OKADA, Akira & 岡田, 章, 2014. "International Cooperation and Institution Formation: A Game Theoretic Perspective," Discussion Papers 2014-17, Graduate School of Economics, Hitotsubashi University.

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    More about this item

    Keywords

    Public goods; Second-order dilemma; Voluntary participation; Accumulation; Group formation; C72; D7; H41;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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