Voluntary Participation and Provision of Public Goods in Large Finite Economies

Authors


  • Hideo Konishi, Department of Economics, Boston College, Chestnut Hill, MA 02467 (hideo.konishi@bc.edu). Ryusuke Shinohara, Faculty of Economics, Hosei University, 4342 Aihara-machi. Machida, Tokyo 194-0298, Japan (ryusukes@hosei.ac.jp).

  • We thank P. J. Healy, Yukio Koriyama, Hervé Moulin, Koji Takamiya, and the two anonymous referees and the associate editor for their helpful conversations. We also thank participants at Hitotsubashi COE Lectures and Workshop on Choice, Games, and Welfare (January, 2009), Public Economics Workshop at Nagoya Gakuin University (May, 2009), and Theory Workshop at Niigata University (June, 2009).

Abstract

We consider a public good provision game with voluntary participation. Agents participating in the game provide a public good and pay the fees according to a mechanism (allocation rule), while nonparticipants can free-ride on the participants. We examine how the equilibrium public good provision level is affected by enlarging the population of an economy. We introduce a condition for an allocation rule, the asymptotic uniform continuity in replication (AUCR), which requires that small changes in the population must yield only small changes in the public good provision and which is satisfied by many mechanisms. We show that under AUCR, the equilibrium level of the public good converges to zero as the economy is replicated in the sense of Milleron.

Ancillary