Rank-Order Competition in the Voluntary Provision of Impure Public Goods
35 Pages Posted: 24 Mar 2010 Last revised: 31 Mar 2019
Date Written: March 12, 2019
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: Suggested Citation