Inflation Dynamics and Real Marginal Costs: New Evidence from U.S. Manufacturing Industries

Publikation: Working paperForskning

Introducing a threshold in the sense of a minimal project size transforms a public goods game with an inefficient equilibrium into a coordination game with a set of Pareto-superior equilibria. Thresholds may therefore improve efficiency in the voluntary provision of public goods. In our one-shot experiment, we find that coordination often fails and exogenously imposed thresholds are ineffective at best and often counter-productive. This holds under a range of threshold levels and refund rates. We test if thresholds perform better if they are endogenously chosen, i.e. if a threshold is approved in a referendum, because voting may facilitate coordination due to signaling and commitment effects. We find that voting does have signaling and commitment effects but they are not strong enough to significantly improve the efficiency of thresholds.

OriginalsprogEngelsk
UdgiverDepartment of Economics, University of Copenhagen
Antal sider42
StatusUdgivet - 2011

Bibliografisk note

JEL Classification: E31, L60

ID: 37424409