Lotteries and Lindahl Prices in Public Good Provision

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Abstract

Lotteries are traditional instruments for fundraising in general. Morgan has shown that they can also be very effective in the provision of a public good. However, a fair lottery can only enhance provision but never result in the efficient amount. Franke and Leininger show how—by borrowing from optimal contest theory—biased lotteries can provide the efficient amount of the public good. This paper aligns this result with standard public good theory, in particular the classic notion of Lindahl pricing. It shows that biased lotteries can—implicitly—implement Lindahl pricing of the public good in noncooperative Nash equilibrium.

Original languageEnglish
Pages (from-to)840-848
Number of pages9
JournalJournal of Public Economic Theory
Volume20
Issue number6
Early online date15 May 2018
DOIs
Publication statusPublished - 1 Dec 2018

ASJC Scopus subject areas

  • Finance
  • Sociology and Political Science
  • Economics and Econometrics

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