Public goods, group size, and provision aggregation

Abstract

The paper examines the effects of group size on private provision of public goods, focusing on the influence of public good aggregator technologies through which individual contributions determine overall public good provision. We propose a general aggregator that encompasses existing aggregators, accommodates rivalrous public goods, and includes several interesting novel sub-aggregators. Our study of a wide range of aggregators indicates that the effects of group size on public good supply hinges on aggregator structures, thereby highlighting aggregators’ importance for the prognosis of policy intervention. The analysis here between aggregators and group size goes well beyond that of the extant literature. In the presence of income heterogeneity, the paper explores how an entrant affects public good provision for alternative aggregator technologies, which has important implications for income transfer policy of achieving Pareto-improving outcomes. An aggregative game approach greatly facilitates the depiction of group-size changes in equilibrium.