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Voluntary participation in public goods provision with Coasian bargaining

Fuhai Hong and Wooyoung Lim ()

Journal of Economic Behavior & Organization, 2016, vol. 126, issue PA, 102-119

Abstract: This paper reports findings from an experimental study of voluntary participation games, as considered by Dixit and Olson (2000). The voluntary participation game consists of two stages: a non-cooperative participation decision followed by Coasian bargaining on public goods provision only among those who choose to participate. Our experimental findings show that, consistent with the theoretical findings of Dixit and Olson, the outcome of this game falls short of full efficiency. However, we find that voluntary participation undermines the Coase Theorem to a lesser extent than predicted by Dixit and Olson, particularly with larger numbers of players. We also investigate the effect of pre-play communication on the public goods provision and find little evidence that cheap talk helps subjects coordinate on the efficient outcome of coalition formation in the laboratory.

Keywords: Coase Theorem; Voluntary participation; Public goods; Laboratory experiments (search for similar items in EconPapers)
JEL-codes: C91 D71 D83 H41 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1016/j.jebo.2016.02.009

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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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