Voluntary Contribution to Public Goods: Preferences and Wealth

Abstract

This paper analyzes the role of wealth and its distribution in a model of voluntary-contribution to public goods where individuals’ preferences for these goods depend on the level of individual’s wealth. We find that under such circumstances a small redistribution of wealth among contributors is not necessary neutral. We then discuss the conditions under which a redistribution of wealth might improve efficiency in the aggregate provision of public goods. Unlikely what common sense might suggest, we show that a redistribution of wealth can increase the private provision of public goods regardless of whether individuals’ valuations for these goods increase or decrease as their level of wealth increases. Furthermore, we show that under some circumstances, a regressive redistribution of wealth can increase the provision of public goods.