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Vote with their donations : An explanation about crowding-in of government provision of public goods

Author

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  • Ryo Ishida

    (Visiting Scholar, Policy Research Institute, Ministry of Finance,Japan)

Abstract

This paper considers a mechanism where providers of public goods reflect donors f preferences for public goods. When asking individuals and private companies to contribute for a certain public good, it is widely known that the total contributions result in under-provision. Among the many countermeasures for this problem, some fundraisers adopt a measure to reflect large donors f preferences for the characteristics of public goods. In such a case, private contribution is enhanced because there is additional incentive to donate. We formalized such a measure theoretically and proved that this measure surely enhances private contributions. Moreover, we find that government direct subsidy may not only crowd-out but also even crowd-in private contribution under this framework. If fundraisers reflect the major donors f preference, the influence of one fs donation is leveraged by government direct provision. This element enhances private contributions. If this effect dominates the innate crowding-out effect, government direct subsidy may enhance private contribution. This mechanism is a novel explanation for both crowding-out and crowding-in under an identical framework.

Suggested Citation

  • Ryo Ishida, 2015. "Vote with their donations : An explanation about crowding-in of government provision of public goods," Discussion papers ron272, Policy Research Institute, Ministry of Finance Japan.
    • Handle: RePEc:mof:wpaper:ron272
    as

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    File URL: https://warp.da.ndl.go.jp/info:ndljp/pid/11511171/www.mof.go.jp/pri/research/discussion_paper/ron272.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    private provision; public goods; crowding out; crowding in; voting;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets

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