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Provision of public goods: Unconditional and conditional donations from outsiders

Esther Blanco (), Tobias Haller () and James M. Walker ()

Working Papers from Faculty of Economics and Statistics, University of Innsbruck

Abstract: Public goods often benefit a larger group than those who can actively provide them. This paper addresses institutional arrangements between subjects who can provide a public good (insiders) and subjects who also benefit from the public good but cannot provide it (outsiders) due to technical, physical or institutional reasons. Using laboratory experiments, we compare a setting of passive outsiders to situations where outsiders can either make unconditional or conditional transfers to the group of insiders. The primary behavioral questions are to what extent outsiders will use the opportunity to subsidize the contributions of insiders and how insiders will respond to those subsidies. In summary, outsiders make transfers to insiders, but there is little evidence of reciprocal increases in contributions by insiders to transfers offered. Indeed, provision levels of the public good across decision periods are lower than the baseline condition, where there are no opportunities for transfers from outsiders.

Keywords: Public goods; Institution; Externality; Laboratory Experiment (search for similar items in EconPapers)
JEL-codes: D70 H41 C92 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-exp, nep-pub and nep-soc
Date: 2016-05, Revised 2016-11
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