Pareto improvement through unilateral matching of public good contributions: The role of commitment

Wolfgang Buchholz, Richard Cornes, Wolfgang Peters, Dirk Rübbelke*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    12 Citations (Scopus)

    Abstract

    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.

    Original languageEnglish
    Pages (from-to)9-12
    Number of pages4
    JournalEconomics Letters
    Volume132
    DOIs
    Publication statusPublished - 1 Jul 2015

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