A Rationale for Non-Monotonic Group-Size Effect in Repeated Provision of Public Goods


Wang, Chengsi ; Zudenkova, Galina


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URL: https://ub-madoc.bib.uni-mannheim.de/35259
URN: urn:nbn:de:bsz:180-madoc-352598
Document Type: Working paper
Year of publication: 2014
The title of a journal, publication series: Working Paper Series
Volume: 14-03
Place of publication: Mannheim
Publication language: English
Institution: School of Law and Economics > VWL, Finanzwissenschaft (Juniorprofessur) (Zudenkova 2013-)
MADOC publication series: Department of Economics > Working Paper Series
Subject: 330 Economics
Classification: JEL: H40 , D73,
Keywords (English): pure public goods , repeated game , non-monotonic group-size effect
Abstract: This paper analyzes the impact of a group-size change on contributing incentives in repeated provision of pure public goods. We develop a model in which the group members interact repeatedly and might be temporarily constrained to contribute to the public goods production. We show that an increase in the group size generates two opposite effects - the standard free-riding effect and the novel large-scale effect, which enhances cooperative incentives. Our results indicate that the former effect dominates in relatively large groups whilethe latter in relatively small groups. We provide therefore a rationale for nonmonotonic group-size effect which is consistent with the previous empirical and experimental findings.

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