DP8319 An impure public good model with lotteries in large groups

Author(s):	Antonio Cabrales, Haydée Lugo
Publication Date:	April 2011
Keyword(s):	efficiency, lotteries, public good, warm glow
JEL(s):	D64, H21, H41
Programme Areas:	Public Economics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=8319

We analyze the effect of a large group on an impure public goods model with lotteries. We show that as populations get large, and with selfish preferences, the level of contributions converges to the one given by voluntary contributions. With altruistic preferences (of the warm glow type), the contributions converge to a level strictly higher than those given by voluntary contributions, even though in general they do not yield first-best levels.