Franke and Wolfgang Leininger On the Effi cient Provision of Public Goods by Means of Lotteries

We provide a solution to the free-rider problem in the provision of a public good. To this end we defi ne a biased indirect contribution game which provides the effi cient amount of the public good in non-cooperative Nash equilibrium. No confi scatory taxes or other means of coercion are used. We rather extend the model of Morgan (2000), who used fair raffl es as voluntary contribution schemes, to unfair or biased raffl es, which we show to be equivalent to fair raffl es whose tickets are sold to consumers at diff erent individual prices. We give a detailed account of the solution for the case of two diff erent consumers and discuss its implications for the general case of many consumers. JEL Classifi cation: C72, D72, H41