Rank-order competition in the voluntary provision of impure public goods

Andrej Angelovski, Tibor Neugebauer, Maroš Servátka

Research output: Contribution to journalArticleResearchpeer-review

Abstract

Publicly provided goods often create differential payoffs due to timely or spatial distances of group members. We design and test a provision mechanism which utilizes rank competition to mitigate free-riding in impure public goods. In our Rank-Order Voluntary Contribution Mechanism (Rank-Order-VCM) group members compete via observable contributions for a larger share of the public good; high contributors receive preferential access (a larger share), while low contributors receive restricted access (a lower share). In a laboratory experiment, Rank-Order-VCM elicits median contributions equal to the full endowment throughout the finitely played games with constant groups. In the control treatment, with randomly assigned ranks, the contributions are significantly lower and decline over time. We thus provide evidence of rank competition, in situations where discriminatory access to public goods is possible, being efficiency enhancing. (JEL C91, H41).

LanguageEnglish
Pages2163-2183
Number of pages21
JournalEconomic Inquiry
Volume57
Issue number4
Early online date30 Apr 2019
DOIs
Publication statusPublished - 2019

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Voluntary provision
Voluntary contribution mechanism
Laboratory experiments
Free-riding
Endowments
Median

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Angelovski, Andrej ; Neugebauer, Tibor ; Servátka, Maroš. / Rank-order competition in the voluntary provision of impure public goods. In: Economic Inquiry. 2019 ; Vol. 57, No. 4. pp. 2163-2183.
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Rank-order competition in the voluntary provision of impure public goods. / Angelovski, Andrej; Neugebauer, Tibor; Servátka, Maroš.

In: Economic Inquiry, Vol. 57, No. 4, 2019, p. 2163-2183.

Research output: Contribution to journalArticleResearchpeer-review

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