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Public Goods and Minimum Provision Levels: Does the institutional formation affect cooperation?

Peter Martinsson and Emil Persson

No 655, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: We investigate the role of institutional formation on the implementation of a binding minimum contribution level in a linear public goods game. Groups either face the minimum level exogenously imposed by a central authority or are allowed to decide for themselves by means of a group vote whether or not a minimum level should be implemented. We find a binding minimum contribution level to have a positive and substantially significant effect on cooperation. The main impact is on the extensive margin, meaning that it is possible to force free riders to increase their contribution without crowding out others’ voluntary contributions. This result is robust to the mode of implementation and thus when the minimum level is enforceable, it is a simple policy that will increase provision of the public good.

Keywords: Public goods; Minimum level; Voting; Experiment (search for similar items in EconPapers)
JEL-codes: C91 D72 H41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-pol and nep-pub
Date: 2016-04
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