Revisiting the impact of uncertainty in the private provision of public goods

Etienne Billette de Villemeur, Sebastián Cea and Conrado Cuevas

MPRA Paper from University Library of Munich, Germany

Abstract: We revisit the consequences of uncertainty in the private provision of a public good. We show that, despite the risk aversion of agents and the decreasing returns to scale in the production function of the public good, uncertainty may improve welfare. This may hold true even if uncertainty leads to a reduction in the aggregate amount of donations for the production of the public good. This may also hold true when uncertainty makes the production of the public good more costly on average. Our findings suggest that regulation and control over the production process for public goods might not always be a desirable policy.

Keywords: Public goods; Uncertainty; Control (search for similar items in EconPapers)
JEL-codes: D64 D8 H41 (search for similar items in EconPapers)
Date: 2022-10
New Economics Papers: this item is included in nep-mic and nep-reg
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https://mpra.ub.uni-muenchen.de/115491/1/MPRA_paper_115491.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:114888

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