Social preferences and private provision of public goods: A ‘double critical mass’ model

We set up an evolutionary game-theoretic model aimed at addressing the issue of local public good provision via direct commitment of voluntary forces (private donors and
nonprofit providers) only. Two classes of agents are assumed to strategically interact within a ‘double critical mass’ model and we investigate the critical factors affecting the dynamic outcomes of such interaction. Further, we explore the conditions under which (what we term) ‘evolutionary crowding-out/in‘ occurs, depending on agents’ degree of opportunism, social comparison and positive selective incentives (such as subsidies given by the government to ‘virtuous’ citizens or nonprofits only).

Article by Angelo Antoci, Pier Luigi Sacco, Luca Zarri
Published in Springer Science+Business Media, LLC. 2007
Public Choice, Vol. 135, No. 3/4 (Jun., 2008), pp. 257-259

From the Conclusions (excerpt)
(…)The conclusions above sound rather intuitive: as far as voluntary provision of public good is concerned, variations such as (1) a subsidy to efficient nonprofits, (2) an increase in the degree of Selective Crowding-in among actual donors and (3) a decrease in the cost of contributing to the good on the part of actual donors (either because of a subsidy or of ‘warm glow’ motives), all increase other things being equal the probability that collective good provision actually occurs.
In this regard, it is important to remark that all these three factors act as ‘positive selective incentives’, i.e. selectively affect either the pro-social group on the¬†demand side (actual donors, D) or the efficient institutions on the supply side (high-effort level nonprofit organizations, H). Further, it is interesting to read the positive effect of a decrease in the agents’ costs of contributing in the light of the experimental literature on public goods provision, mainly relying on an institutional framework such as the so called voluntary-contributions mechanism (VCM). The VCM is a simple repeated game in which a group of participants have to allocate a number of ‘tokens’ either to a private exchange or to a group exchange (…).

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