Lotteries, Public Good Provision and the Degree of Rivalry

11 Pages Posted: 9 Aug 2008

See all articles by Paul Pecorino

Paul Pecorino

University of Alabama - Department of Economics, Finance and Legal Studies

Akram Temimi

University of Alabama, Tuscaloosa

Date Written: August 8, 2008

Abstract

Under the standard summation technology, pure public goods can be provided via the direct contributions mechanism, even in an arbitrarily large group. However, if the public good exhibits any degree of rivalry, individual consumption of the public good will fall to zero as group size grows large. Thus, the direct contributions mechanism is not robust to the introduction of rivalry. By contrast, Morgan's (2000) lottery mechanism is robust to the introduction of rivalry when the lottery prize is proportional to group size. The lottery mechanism can provide public goods in a large group when the public good exhibits a degree of rivalry, provided that the degree of rivalry is not too high. This suggests that the lottery mechanism can provide a broader range of public goods in a large group than the direct contributions mechanism.

Keywords: Collective Action, Public Goods, Group Size, Lotteries

JEL Classification: D7, H4, C72

Suggested Citation

Pecorino, Paul and Temimi, Akram, Lotteries, Public Good Provision and the Degree of Rivalry (August 8, 2008). U of Alabama Public Law Research Paper No. 08-08-01, Available at SSRN: https://ssrn.com/abstract=1212650 or http://dx.doi.org/10.2139/ssrn.1212650

Paul Pecorino (Contact Author)

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States
205-348-0379 (Phone)
205-348-0590 (Fax)

Akram Temimi

University of Alabama, Tuscaloosa ( email )

Department of Economics, Finance and Legal Studies
P.O. Box 870244
Tuscaloosa, AL 35487
United States
205-348-8961 (Phone)

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