Rank-Order Competition in the Voluntary Provision of Impure Public Goods

35 Pages Posted: 24 Mar 2010 Last revised: 31 Mar 2019

See all articles by Andrej Angelovski

Andrej Angelovski

LUISS Guido Carli

Tibor Neugebauer

Luxembourg School of Finance

Maroš Servátka

Macquarie Graduate School of Management - MGSM Experimental Economics Laboratory

Date Written: March 12, 2019

Abstract

Publicly provided goods often create differential payoffs due to timely or spatial distances of group members. We design and test a provision mechanism which utilizes rank competition to mitigate free-riding in impure public goods. In our Rank-Order Voluntary Contribution Mechanism (Rank-Order-VCM) group members compete via observable contributions for a larger share of the public good; high contributors receive preferential access (a larger share), while low contributors receive restricted access (a lower share). In a laboratory experiment Rank-Order-VCM elicits median contributions equal to the full endowment throughout the finitely played games with constant groups. In the control treatment, with randomly assigned ranks, the contributions are significantly lower and decline over time. We thus provide evidence of rank competition, in situations where discriminatory access to public goods is possible, being efficiency enhancing.

Keywords: Competition, contest, rank order, cooperation, public goods, experiment, voluntary contribution mechanism

JEL Classification: C91, H41

Suggested Citation

Angelovski, Andrej and Neugebauer, Tibor and Servátka, Maroš, Rank-Order Competition in the Voluntary Provision of Impure Public Goods (March 12, 2019). Available at SSRN: https://ssrn.com/abstract=1572465 or http://dx.doi.org/10.2139/ssrn.1572465

Andrej Angelovski

LUISS Guido Carli ( email )

Rome
Italy

Tibor Neugebauer

Luxembourg School of Finance ( email )

6, rue Richard Coudenhove-Kalergi
Luxembourg, L-1359
Luxembourg

Maroš Servátka (Contact Author)

Macquarie Graduate School of Management - MGSM Experimental Economics Laboratory ( email )

Sydney
Australia

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