Voluntary purchase of public goods

This paper examines the application of Buchanan's ‘independent adjustment’ model of public good provision to individual donations to voluntary or non-profit organizations. An individual's donation function is a simple transformation of the Marshallian demand function; consequently donation functions ‘reveal,’ in principle, preferences for public goods. The existence of a tax-subsidy system sustaining a Pareto optimal level of provision is demonstrated, and the relationship to the existing subsidy scheme in the U.S. is examined. Finally, two implications of the model suggest that it is not appropriate as a representation of actual donor behavior.     

Rent-seeking for pure public goods

In this paper we present a formal analysis of rent-seeking for public goods by two or more groups with different numbers of individuals. We begin by considering equally wealthy groups under risk neutrality, a case which constitutes our basic model. Several surprising and interesting results emerge from the analysis of this basic case. The problem is then extended to deal with (a) groups with different wealth levels, and (b) risk aversion. This last extension brings about a further crop of interesting and useful results.     

The private provision of public goods via dominant assurance contracts

Many types of public goods can be produced privately by profit seeking entrepreneurs using a modified form of assurance contract, called a dominant assurance contract. I model the dominant assurance contract as a game and show that the pure strategy equilibrium has agents contributing to the public good as a dominant strategy. The game is also modelled under incomplete information as a Bayesian-Nash game.     

From weakest-link to best-shot: The voluntary provision of public goods

It has traditionally been assumed that the socially available amount X of a public good is the simple sum of the separate amounts x _i produced by the i = 1, ..., I members of the community. But there are many other possibilities of practical importance. Among them are: (i) Weakest-link rule, where the socially available amount is the minimum of the quantities individually provided, and (ii) Best-shot rule, where the socially available amount is the maximum of the individual quantities. The former tends to arise in linear situations, where each individual has a veto on the total to be provided (e.g., if each is responsible for one link of a chain); the latter tends to arise when there is a single prize of overwhelming importance for the community, with any individual's effort having a chance of securing the prize. In comparison with the standard Summation formula of ordinary public-good theory, it is shown that underprovision of the public good tends to considerably moderated when the Weakest-link function is applicable, but aggravated when the Best-shot function is applicable. In time of disaster, where the survival of the community may depend upon each person's doing his duty, the conditions for applicability of the Weakest-link rule are approximated. This circumstance explains the historical observation that disaster conditions tend to elicit an extraordinary amount of unselfish behavior.     

The effect of incomplete information in a threshold public goods experiment

Fiscal stress and decreasing government budgets have led to renewed interest in voluntary contributions for the funding of public goods. This paper experimentally examines the Provision Point Mechanism (PPM), a voluntary contribution mechanism for the funding of lumpy public goods. Previous research has demonstrated the effectiveness of this mechanism at providing public goods, however all were conducted in an environment of complete information, which fails to capture the uncertainties of the real world. This study tests the efficacy of the PPM in informationally limited settings. We find no significant differences in the rate of successful provisions or level of group contributions when subjects have limited information about the valuations of others than when they have complete information.     

South Africa: capital accumulation and violence

This article analyses the conditions of capital accumulation in South Africa, and seeks to explain the authoritarian and racially discriminatory features of the South African social structure in terms of (a) the specific historical processes of change (mercantile colonial conquest, primitive accumulation in mining and farming) and (b) the specific features of contemporary capitalism, notably the capital-intensive structure of industry. The authoritarianism embodied, for example, in the extra-economic coercion of black labour is seen as reflecting the circumstances of the struggle between capital and labour under conditions where capital-labour contradictions exist alongside the contradiction between South African capitalism and the ‘dependent’ societies it has preserved/recreated. The implications of this situation for strategies of socialist change are briefly evaluated.     

The flypaper effect and competition in the local market for public goods

In this paper, we explore how the ability of bureaucrats to extract resources from their community may be limited by competition in the local market for public goods. Specifically, we examine intergovernmental aid as a resource bureaucrats seek to control. Intergovernmental aid has been found to be more stimulative of local government expenditures than predicted by neo-classical economic theory. In this research, the ‘flypaper effect’ is used as an indicator of the ability of bureaucrats to control local resources in excess of local demand and preferences. We empirically relate variation in the flypaper effect to the extent of competition in the local market for public goods. Competition does not consistently limit the flypaper effect. The implications of this finding for theories of competition in the local market for public goods are then discussed.     

The life satisfaction approach to valuing public goods: The case of terrorism

Terrorism has large social costs that are difficult to quantify for the well-known problems of eliciting people’s preferences for public goods. We use the LSA to assess these costs in utility and monetary terms. Based on combined cross-section time-series data, we estimate the costs of terrorism for France and the British Isles. We find large negative effects of terrorism on life satisfaction that translate into considerable compensating surpluses for a hypothetical reduction in terrorism, in particular for the serious conflict in Northern Ireland. The effects of terrorism are robust and differ across groups in accordance with prior expectations.