A Note on Pareto Improving Lotteries in Voluntary Public Good Provision

Abstract

This paper characterizes the utility possibility frontier resulting in a model of private voluntary provision of a public good. It is shown that ex-ante lotteries over resource distributions among the players can be Pareto improving. A corollary is that an equal distribution of resources among the agents, or any distribution where all agents contribute in equilibrium, is always Pareto dominated by a lottery between two unequal distributions.

Keywords: Public goods, private provision, lotteries, Pareto efficiency

JEL Classification: H41, D31