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Giebe, Thomas and Schweinzer, Paul (March 2011): The efficient provision of public goods through non-distortionary tax contests. SFB/TR 15 Discussion Paper No. 352 [PDF, 324kB]


We use a simple balanced budget contest to collect taxes on a private good in order to ?nance a pure public good. We show that-with an appropriately chosen structure of winning probabilities-this contest can provide the public good efficiently and without distorting private consumption. We provide extensions to multiple public goods and private taxation sources, asymmetric preferences, and show the mechanism’s robustness across these settings.

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