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

Author

Listed:
  • Martinsson, Peter

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Persson, Emil

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

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.

Suggested Citation

  • Martinsson, Peter & Persson, Emil, 2016. "Public Goods and Minimum Provision Levels: Does the institutional formation affect cooperation?," Working Papers in Economics 655, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0655
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    File URL: http://hdl.handle.net/2077/42418
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    3. Chan, Nathan W. & Wolk, Leonard, 2020. "Cost-effective giving with multiple public goods," Journal of Economic Behavior & Organization, Elsevier, vol. 173(C), pages 130-145.
    4. Jürgen Huber & Laura Hueber & Daniel Kleinlercher & Thomas Stöckl, 2022. "Acceptance or rejection of welfare migration—an experimental investigation," SN Business & Economics, Springer, vol. 2(11), pages 1-28, November.
    5. Bouma, J.A. & Nguyen, Binh & van der Heijden, Eline & Dijk, J.J., 2018. "Analysing Group Contract Design Using a Lab and a Lab-in-the-Field Threshold Public Good Experiment," Discussion Paper 2018-049, Tilburg University, Center for Economic Research.
    6. Nhim, Tum & Schuch, Esther & Richter, Andries, 2023. "Water scarcity and support for costly institutions in public goods: Experimental evidence from Cambodia," Ecological Economics, Elsevier, vol. 212(C).
    7. Astrid Dannenberg & Carlo Gallier, 2019. "The Choice of Institutions to Solve Cooperation Problems: A Survey of Experimental Research," MAGKS Papers on Economics 201911, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    8. Hofmann Elisa & Kyriacou Lucas & Schmidt Klaus M., 2023. "A Model United Nations Experiment on Climate Negotiations," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 243(5), pages 543-566, October.
    9. Hofmann, Elisa & Kyriacou, Lucas & Schmidt, Klaus M., 2021. "A Model United Nations Experiment on Climate Negotiations," Rationality and Competition Discussion Paper Series 266, CRC TRR 190 Rationality and Competition.
    10. Schmidt, Klaus M., 2021. "Das Design von Klimaschutzverhandlungen," Rationality and Competition Discussion Paper Series 270, CRC TRR 190 Rationality and Competition.
    11. Thomas Markussen & Jean-Robert Tyran, 2023. "Is There a Dividend of Democracy? Experimental Evidence from Cooperation Games," CESifo Working Paper Series 10616, CESifo.
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    More about this item

    Keywords

    Public goods; Minimum level; Voting; Experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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