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Private provision of public goods via crowdfunding§

Published online by Cambridge University Press:  02 May 2017

MAREK HUDIK  and
ROBERT CHOVANCULIAK
MAREK HUDIK*
Affiliation:
Xi'an Jiaotong–Liverpool University, Suzhou, China
ROBERT CHOVANCULIAK*
Affiliation:
Institute of Economic and Social Studies, Bratislava, Slovakia
*
*Email: marek.hudik@xjtlu.edu.cn
**Email: robert.chovanculiak@iness.sk
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Abstract

For various reasons, governments sometimes fail to provide public goods. Private provision of such goods might then be used if it succeeds in overcoming three main problems: high organization costs, the assurance problem, and the free-rider problem. We argue that technologies that enable crowdfunding – the method of funding projects by raising small amounts of money from a large number of people via the internet – have enabled these problems to be overcome more readily. Such technology has lowered organization costs and enabled the employment of more efficient mechanisms to reduce the assurance and free-rider problems. To illustrate these effects, we present two case studies of private provision of public goods via crowdfunding: police services in Rockridge in Oakland, California, and the Ukraine Army.

Type
Research Article
Information
Journal of Institutional Economics , Volume 14 , Issue 1 , February 2018 , pp. 23 - 44
Copyright
Copyright © Millennium Economics Ltd 2017 

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Footnotes

§

We would like to thank Miguel Sanchez Villalba and two anonymous referees for their helpful comments and suggestions. Any mistakes are, of course, ours alone.

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