 |
The main purpose of this paper is to investigate how heterogenous incomes as well as heterogenous preferences among potential donors affect the timing of contribution decisions when the timing decisions of contributions is endogenously determined by contributors themselves. More specifically, we consider how redistributions of income which alter the extent of income inequality affects the well-being of individuals as well as social welfare when potential donors are allowed for the endogenous choices of contribution timing as well as how much to contribute in the voluntary provision of public goods using a simple setting with two donors, Cobb-Duglas preferences and complete informations about the returns or utility from public and private consumptions..This paper demonstrates the following results. First, when the inequality of income among individuals becomes huge, the timing of providing public goods does not matter. That is, when it is extremely unequal, the timing between simultaneous and sequential moves is indifferent from the viewpoint of potential contributors who have different preferences toward public goods. Second, when the income gap is narrowed, the simultaneous move is more likely to arise as an equilibrium outcome, because all potential contributors prefer acting as a leader. In addition, the higher valued contributors prefer acting as a follower. Third, in the presence of multiple public goods the higher valued contributors for a particular public good tend to be a first contributor to that public good, although the impacts of income inequality affect the timing of contribution in the same way as in the model of a single public good.
