On the Efficient Provision of Public Goods by Means of Lotteries

24 Pages Posted: 21 Feb 2013

See all articles by Jörg Franke

Jörg Franke

University of Dortmund - Department of Economics

Wolfgang Leininger

University of Dortmund - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Date Written: January 1, 2013

Abstract

We provide a solution to the free-rider problem in the provision of a public good. To this end we define a biased indirect contribution game which provides the efficient amount of the public good in non-cooperative Nash equilibrium. No confiscatory taxes or other means of coercion are used. We rather extend the model of Morgan (2000), who used fair raffles as voluntary contribution schemes, to unfair or biased raffles, which we show to be equivalent to fair raffles whose tickets are sold to consumers at different individual prices. We give a detailed account of the solution for the case of two different consumers and discuss its implications for the general case of many consumers.

Keywords: Public good provision, biased lotteries, charities

JEL Classification: C72, D72, H41

Suggested Citation

Franke, Jörg and Leininger, Wolfgang, On the Efficient Provision of Public Goods by Means of Lotteries (January 1, 2013). Ruhr Economic Paper No. 399, Available at SSRN: https://ssrn.com/abstract=2221285 or http://dx.doi.org/10.2139/ssrn.2221285

Jörg Franke (Contact Author)

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
Germany

Wolfgang Leininger

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
Germany
+49 231 755 3297 (Phone)
+49 231 755 3027 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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