Foreign Aid and Weakest-Link International Public Goods: An Experimental Study
Posted: 16 Dec 2005 Last revised: 27 Jan 2010
Date Written: 2006
In this paper, we investigate efficiency differences between income and in-kind transfers as distribution mechanisms of foreign aid to weakest-link international public goods in a laboratory environment. We find that if there is relatively small difference in country size, then income transfers seem to provide a higher provision of the international public good, and thus higher overall welfare level than that of in-kind transfers. However, if there is a large disparity in country size, then in-kind transfers appear to provide a higher level of IPG provision and higher accompanying global welfare.
Keywords: Foreign aid, Public goods, Weakest-link, Neutrality, Experiments
JEL Classification: D70, H41, C90
Suggested Citation: Suggested Citation