Should a benevolent government provide public goods if it cannot commit?

Francisco Silva

Economic Inquiry, 2023, vol. 61, issue 3, 720-737

Abstract: I compare two different systems of provision of binary public goods: a centralized system, operated by a benevolent government that has limited commitment power; and a decentralized system, based on voluntary contributions, where agents can communicate but cannot write contracts. I show that any ex‐post individually rational allocation that is implementable by the centralized system is also implementable by the decentralized system. This suggests that when the public good provision problem is merely an informational one, as is the case with binary public goods, a decentralized system may perform better.

Date: 2023
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