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On the voluntary provision of “weakest‐link” public goods: The case of private information

Stefano Barbieri and David A. Malueg

Journal of Public Economic Theory, 2019, vol. 21, issue 5, 866-894

Abstract: We characterize equilibria in a private‐provision public‐good game where individuals are allowed arbitrary contribution levels and the level of the public good equals the least contribution made by an individual. Equilibrium comparative statics are derived for the interim Pareto‐dominant equilibrium. First, improvements in the cost distribution of even only one player benefit all. Second, even with such “weakest‐link” public goods, for which greater similarity of preferences would seem to facilitate coordination, decreased heterogeneity can actually decrease payoffs. Indeed, increasing the riskiness of cost distributions has an ambiguous effect on welfare. Two mechanisms are provided for improving equilibrium payoffs: Technology transfer and cheap‐talk communication. While substantial welfare gains are possible, examples show that (a) technology transfer may be futile if a “regularity” condition is not satisfied and (b) cheap talk may be useless if the language for communication is not sufficiently rich.

Date: 2019
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Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

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