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An experimental study on the effects of co-payment in public services

Aurora García-Gallego (), Nikolaos Georgantzís (), Giaandrea Staffiero () and Tarek Jaber-López ()
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Giaandrea Staffiero: Center for Research in Economics and Health (CRES)
Tarek Jaber-López: LEE & Department of Economics, Universitat Jaume I, Castellón, Spain

No 2013/03, Working Papers from Economics Department, Universitat Jaume I, Castellón (Spain)

Abstract: We analyze the effect of imposing a charge for the individual appropriation of common resources. In our design, withdrawing the maximum amount is the dominant strategy for every player, but the resulting equilibrium is socially inefficient. We find that the presence of a price, small enough to leave intact the trade-off between individual incentives and collective welfare, is not effective in reducing appropriation among players who have previously played without it. On one hand, the upward trend in the average extraction of common funds continues after the introduction of a price. On the other hand, the presence of a price does decrease withdrawals, in comparison with a baseline treatment without any charge, as long as it is imposed from the outset. Our design sheds light on the conditions for the effectiveness of co-payment in curbing the over-consumption of public resources, most notably in the realm of healthcare.

Keywords: Common-Pool Resources; Co-Payment; Public Goods; Consumer Choice (search for similar items in EconPapers)
JEL-codes: C91 C92 H41 I11 I18 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2013
New Economics Papers: this item is included in nep-agr, nep-env and nep-exp
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Journal Article: An experimental study on the effect of co-payment in public services (2016) Downloads
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