Taxpayers,Suckers and Free Riders

Abstract

In the traditional theory, resources for providing public goods will not be contributed voluntarily. The state's role is to exert mutually agreed coercion and organize Pareto-superior exchanges of public goods against taxes. `Government failures' spoil the attractions of this solution. In a more general theory, `excludability' is replaced by exclusion cost, and `joint supply' by access not subject to price or non-price allocation. The probability that one's benefit is contingent on one's contribution becomes a significant variable. Rational non- altruists will not generally have a dominant strategy of non-contribution. They may choose the `sucker' or the `free rider' strategy, depending on their assessment of the risk of having no or too few public goods.