The Private Provision of Public Goods Via Dominant Assurance Contracts
Posted: 25 Feb 1997
Many types of public goods can be produced privately by profit-seeking entrepreneurs using a modified form of assurance contract, called a dominant assurance contract. I model the dominant assurance contract as a game and show that the pure strategy equilibrium has agents contributing to the public good as a dominant strategy. The game is also modeled under incomplete information as a Bayesian-Nash game.
JEL Classification: H41, C72
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