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

21 Pages Posted: 14 May 2020

See all articles by Andrej Angelovski

Andrej Angelovski

Middlesex University

Tibor Neugebauer

Université du Luxembourg - Department of Finance

Maroš Servátka

Macquarie Graduate School of Management - MGSM Experimental Economics Laboratory

Multiple version iconThere are 2 versions of this paper

Date Written: October 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.

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 (October 2019). Economic Inquiry, Vol. 57, Issue 4, pp. 2163-2183, 2019, Available at SSRN: https://ssrn.com/abstract=3596392 or http://dx.doi.org/10.1111/ecin.12797

Andrej Angelovski (Contact Author)

Middlesex University ( email )

London
United Kingdom

Tibor Neugebauer

Université du Luxembourg - Department of Finance

Campus Kirchberg
6 rue Richard Coudenhove-Kalergi
L-1359 Luxembourg
Luxembourg

Maroš Servátka

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

Sydney
Australia

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