The second-order dilemma of public goods and capital accumulation

The second-order dilemma arises from each individual’s incentive to free ride on a mechanism to solve the public goods provision problem (the first-order dilemma). We show by a voluntary participation game that if the depreciation rate is low, public goods can be accumulated through voluntary groups for provision, and that the accumulation is effective in solving the second-order dilemma. This analysis also shows that population growth increases the accumulation of public goods in the long run.