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Should the government provide public goods if it cannot commit?

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  • Francisco Silva

Abstract

I compare two di/erent systems of provision of binary public goods: a centralized system, ruled by a benevolent dictator who has limited commitment power; and a decentralized system, based on voluntary contributions, where agents can communicate but cannot write contracts. I show that any ex-post individually rational allocation that is implementable by the centralized system is also imple mentable by the decentralized system. This suggests that when the public good provision problem is merely an informational one, as is the case with binary public goods, a decentralized system may perform better.

Suggested Citation

  • Francisco Silva, 2020. "Should the government provide public goods if it cannot commit?," Documentos de Trabajo 538, Instituto de Economia. Pontificia Universidad Católica de Chile..
    • Handle: RePEc:ioe:doctra:538
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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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