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Public Goods and Minimum Provision Levels: Does the Institutional Formation Affect Cooperation?

Journal article
Authors Peter Martinsson
E. Persson
Published in Scandinavian Journal of Economics
Volume 121
Issue 4
Pages 1473-1499
ISSN 0347-0520
Publication year 2019
Published at Department of Economics
Pages 1473-1499
Language en
Links dx.doi.org/10.1111/sjoe.12321
Keywords Experiment, minimum level, public goods, voting, voluntary provision, impure altruism, hidden costs, punishment, sanctions, participation, behavior, rules, Business & Economics
Subject categories Economics and Business

Abstract

We investigate experimentally the role of institutional formation on the implementation of a binding minimum contribution level to a public good. Groups either face the minimum level exogenously imposed by a central authority, or are allowed to decide for themselves by means of a group vote whether a minimum level should be implemented. We find that a binding minimum contribution level has a positive and substantially significant effect on cooperation. Interestingly, we do not find an additional positive effect of democracy in the context of our experiment; the minimum-level intervention is as effective when exogenously implemented as when endogenously chosen.

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