Group Size and Heterogeneity in the Private Provision of Public Goods

Ratna K. Shrestha ; Kwang Soo Cheong

Visiting Professor, Department of Economics, University of British Columbia, 997-1873 East Mall, Vancouver V6T 1Z1, Canada, Tel: +1-604-822-5608, Fax: +1-604-822-5915 shrestha@interchange. ubc.ca
Assistant Professor, Department of Finance, Johns Hopkins University, 1625 Massachusetts Avenue, NW., Washington, DC 20036, U. S. A., Tel: +1-202-588-0689, Fax: +1-202-588-5192 kscheong@jhu. edu

JEL Classification: H41

Abstract

The traditional approach to voluntary provision of pure public goods typically models the factors of group heterogeneity and group size in a piecemeal fashion and fails to explain salient empirical observations. Integrating both factors into a single model, we examine how they interact with each other to determine the structure of Nash equilibrium, and show that this model is indeed useful in making realistic predictions.

Keywords:

Private provision of public goods, Group size and heterogeneity

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