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Provision of public goods: Unconditional and conditional donations from outsiders

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  • Esther Blanco
  • Tobias Haller
  • James M. Walker

Abstract

Public goods often provide external benefits to individuals beyond those who actively provide the goods. This paper addresses institutional arrangements between subjects who can provide a public good (insiders) and subjects who also benefit from the public good but cannot provide it (outsiders) due to technical, physical or institutional reasons. Using laboratory experiments, we compare a setting of passive outsiders to situations where outsiders can either make unconditional or conditional transfers to the group of insiders, in environments where transfers are shared equally among insiders. The primary behavioral questions are to what extent outsiders will use the opportunity to subsidize the contributions of insiders and how insiders will respond to those subsidies. In summary, outsiders make transfers to insiders, but reciprocal increases in contributions by insiders to transfers are small. Both transfers and contributions decay over time. Indeed, contributions to the public good with transfer institutions are no greater than those without such institutions.

Suggested Citation

  • Esther Blanco & Tobias Haller & James M. Walker, 2016. "Provision of public goods: Unconditional and conditional donations from outsiders," Working Papers 2016-16, Faculty of Economics and Statistics, Universität Innsbruck, revised Nov 2016.
    • Handle: RePEc:inn:wpaper:2016-16
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    References listed on IDEAS

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    More about this item

    Keywords

    Public goods; Institution; Externality; Laboratory Experiment;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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