Voluntary Provision of Public Goods for Bads: A Theory of Environmental Offsets

Matthew J. Kotchen

102 citations0/0 files storedThe Economic Journal

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Economic Policies and Impacts Climate Change Policy and Economics Environmental Conservation and Management

Abstract

This article examines voluntary provision of a public good that is motivated, in part, to compensate for activities that diminish the public good. Markets for environmental offsets, such as those that promote carbon neutrality, provide an increasingly salient example. An important result is that mean donations do not converge to zero as the economy grows large. The equilibrium is solved to show how direct donations and net contributions depend on wealth and heterogeneous preferences. Comparative static analysis demonstrates how public good provision and social welfare depend on the technology, individual wealth and an initial level of the public good.

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References

1954The Pure Theory of Public Expenditure 1990Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving 1996The Theory of Externalities, Public Goods, and Club Goods 1986On the private provision of public goods 1988Privately provided public goods in a large economy: The limits of altruism 1955Diagrammatic Exposition of a Theory of Public Expenditure 1983The private provision of a public good is independent of the distribution of income 1984Easy Riders, Joint Production, and Public Goods

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2017Household behaviour crowds out support for climate change policy when sufficient progress is perceived 2015The value of environmental status signaling 2010EXPLAINING THE PRICE OF VOLUNTARY CARBON OFFSETS 2019The power of active choice: Field experimental evidence on repeated contribution decisions to a carbon offsetting program 2013Non‐Governmental Public Norm Enforcement in Large Societies as a Two‐Stage Game of Voluntary Public Good Provision

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