| Speaker: | Pengfei Liu |
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| Speaker Intro: |
Assistant Research Professor, Agricultural and Resource Economics, University of Connecticut. |
| Host: | |
| Description： |
This paper studies private provision of a discrete public good using provision point mechanism by assuming the social planner has the ability to set up an "assurance contract" in case of provision failure. Our research is motivated by the positive prospects of dominant assurance contract (Tabarrok, 1998) to address the increasing popularity of using voluntary contribution mechanism to fund public projects. We modify the existing assurance contract format by including a minimum price (MP) and an assurance payment (AP); a player will receive a compensation AP if she is willing to contribute above MP in case of provision failure. Theoretically, we find assurance payment significantly eliminates non-provision equilibria, and reduces the multiplicity of provision equilibria suffered by most discrete public good provision games. Experimentally, we examine a set of assurance payment schemes for both one unit using provision point mechanism (PPM) and multi-unit public good provision using individualized price auction (IPA). The assurance payment significantly increases provision point rate, both in the one-unit and the multiple-unit setting. Our proposed mechanism could be useful in establishing markets for a previously non-marketable good, and thus improve the efficiency regarding the provision of various types of public good currently funded only by government or through traditional non-profit donations.
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| Time: | 2016-12-21(Wednesday)16:40-18:00 |
| Venue: | N303, Econ Building |
| Organizer: |