Revisiting the impact of uncertainty in the private provision of public goods

Billette de Villemeur, Etienne and Cea-Echenique, Sebastián and Cuevas, Conrado (2022): Revisiting the impact of uncertainty in the private provision of public goods.

Abstract

We revisit the consequences of uncertainty in the private provision of a public good. We show that, despite the risk aversion of agents and the decreasing returns to scale in the production function of the public good, uncertainty may improve welfare. This may hold true even if uncertainty leads to a reduction in the aggregate amount of donations for the production of the public good. This may also hold true when uncertainty makes the production of the public good more costly on average. Our findings suggest that regulation and control over the production process for public goods might not always be a desirable policy.

• Item Type: MPRA Paper
• Language: English
• Keywords: Public goods; Uncertainty; Control
• Subjects: D - Microeconomics > D6 - Welfare Economics > D64 - Altruism ; Philanthropy; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty; H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods

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