Who contributes to public goods? With an application to local economic policies in the Netherlands

We present three models for the extent to which actors reduce their contributions to the production of a public good because of expected contributions by other actors. The first model is a simple game theoretic model, the second a spatial autocorrelation model, and the third is a hybrid of the first two models. Estimation of the three models from incomplete data is discussed. The three models are applied to data on economic policies of municipalities in the Netherlands. In particular, it is probed whether municipalities take a free ride on the measures of their neighbors.

Notes

Direct communication to the first author. Address: Department of Statistics and Measurement Theory, University of Groningen, Grote Kruisstraat 2/1, 9712 TS Groningen, The Netherlands.

Support from the Royal Netherlands Academy of the Arts and Sciences (KNAW) is acknowledged.