Konrad, Kai A.
Local public goods and central charities.
In: Regional Science and Urban Economics, Vol. 28, No. 3: pp. 345-362
Full text not available from 'Open Access LMU'.
This paper examines the equilibrium properties of private donations to a central charity that uses aggregate contributions for provision of local pure public goods (relieving poverty). If the charity uses exogenous shares for the redistribution of aggregate contributions between regions, the quantity of the local public good that is voluntarily provided typically falls to zero for a large number of regions. However, a central charity can choose a simple allocation rule which fully overcomes the free riding incentives. The mechanism has low information requirements and cannot be used by charities that operate only in one region. © 1998 Elsevier Science B.V.