Abstract
We revise a result stating that there is a positive relationship between contributions and welfare in a public good provision game under price uncertainty (Gradstein et al. Soc Choice Welf 10(4):371–382, 1993). The authors state in Proposition 3 that welfare decreases when price uncertainty induces a reduction in private contributions. By contrast, we show that, under certain conditions, a reduction in contributions can be associated with an improvement in consumer welfare. This result is important because public policy regarding the provision of public goods is often based on indicators such as citizen participation, which, as this note shows, may constitute a misleading signal.
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Notes
It is not difficult to show that the spread effect cannot be positive under real commitments.
Gradstein et al. (1993) refer to the equilibrium contributions. Both the welfare interpretation and its label as a strategic effect are ours.
Our example coincides with a particular parametrization of the example shown in Gradstein et al. (1993) on p. 377.
References
Bergstrom T, Blume L, Varian H (1986) On the private provision of public goods. J Public Econ 29(1):25–49
Gradstein M, Nitzan S, Slutsky S (1993) Private provision of public goods under price uncertainty. Soc Choice Welf 10(4):371–382. https://doi.org/10.1007/BF00182512
Acknowledgements
We thank Rabah Amir, Dan Bernhardt, Elena del Mercato, Emma Moreno-García, Nicolas Gravel, Justin Leroux, Herakles Polemarchakis, Paolo Siconolfi, Juan Pablo Torres-Martínez, Nicolas Treich, Bruno Versaevel and Karen Brandon for their helpful comments and discussions. Sebastián Cea-Echenique gratefully acknowledges the financial support from FONDECYT PostDoc 3170689 where the project started and FONDECYT Iniciación 11230513, Alliance Program—Joint Projects Grant from Columbia University and University Paris 1 and CORFO Ingeniería 2030.
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Billette de Villemeur, E., Cea-Echenique, S. & Cuevas, C. Private provision of public goods under price uncertainty: a comment. Soc Choice Welf (2024). https://doi.org/10.1007/s00355-024-01526-1
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DOI: https://doi.org/10.1007/s00355-024-01526-1