 Dynamic provision of public goods under uncertaintyEconomic Modelling, 2018, vol. 68, issue C, 409-415 Abstract: This study investigates the private provision of public goods under uncertainty using a general dynamic equilibrium model with stochastic disturbances. In particular, the model incorporates income shocks governed by a Wiener process with a mean of zero and standard deviation of unity as uncertainty. We analyze how uncertainty and population size affect the supply of public goods. Dynamic analysis shows the importance of attitude toward risk and a contrast between short-run and long-run responses to increases in uncertainty and population size. Results show that under specified conditions, escalating uncertainty reduces the long-run contributions to public goods through the stochastic accumulation of capital but it raises short-run contributions. The average contribution increases to a positive finite value by increasing the population to a certain level, but it declines toward zero if the population size is infinite. These twin results are based on the dynamic behaviors of risk-averse individuals responding to elevated risks. Keywords: Public goods; Uncertainty; Population size (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:68:y:2018:i:c:p:409-415 DOI: 10.1016/j.econmod.2017.08.008 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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