Pareto Improvement through Unilateral Matching of Public Good Contributions: The Role of Commitment

When providing public goods through voluntary contributions, a donor may introduce unilateral matching in order to reduce underprovision of the public good and thus inefficiency. By itself, however, matching benefits the donor but harms the recipient. We apply Cornes and Hartley's aggregative game approach to provide a novel graphical explanation of this transfer paradox, and also show how it may be avoided by introducing a commitment device.

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Year of publication:	2014
Authors:	Buchholz, Wolfgang ; Cornes, Richard ; Peters, Wolfgang ; Rübbelke, Dirk
Publisher:	Munich : Center for Economic Studies and ifo Institute (CESifo)
Subject:	voluntary public good provision \| matching \| commitment

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Series:	CESifo Working Paper ; 4863
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	789690721 [GVK] hdl:10419/102230 [Handle] RePec:ces:ceswps:_4863 [RePEc]
Classification:	H23 - Externalities; Redistributive Effects ; Environmental Taxes and Subsidies ; H41 - Public Goods
Source:	EconStor

Persistent link: https://www.econbiz.de/10010398655