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Public Goods Provision with Rent-extracting Administrators

Bibliographic Data

ID9703232
AuthorsTobias Cagala (0009-0003-1426-1746, Deutsche Bundesbank), Ulrich Glogowsky (0000-0002-0781-1119, University of Munich, CESifo), Veronika Grimm (0000-0002-9759-4807, University of Erlangen-Nuremberg, CESifo), Johannes Rincke (0000-0002-7722-2790, University of Erlangen-Nuremberg, CESifo, corresponding author)
Year2019
Volume129
Issue620
Pages1593-1617
Publication date2019-05-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/ecoj.12614
OpenAlexW2787788859
LanguageEN
References cited56

This article studies public goods provision when contributors repeatedly interact with rent-extracting administrators. Our main finding is that the presence of an administrator reduces contributions but only because rent extraction lowers the marginal per capita return of investing in the public good. Analysing the interactions between the contributors and the administrator, we demonstrate that rent-extraction and cooperation shocks trigger short-run adjustments in agents’ behaviour. However, shocks do not have permanent effects. This explains the long-run resilience of cooperation to rent extraction. We also show that cooperative attitudes and trust explain the heterogeneity in the short-run volatility of public goods provision

Business · Economics · Microeconomics · Public economics · Public good · Culture, Economy, and Development Studies · Economic theories and models · Experimental Behavioral Economics Studies

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