Bundling Public with Private Goods
36 Pages Posted: 16 May 2013 Last revised: 23 Feb 2017
There are 2 versions of this paper
Date Written: August 16, 2013
Abstract
We propose a simple mechanism that might improve voluntary contributions to public goods. Using a laboratory experiment, we analyze how bundling public with private goods affects individuals’ valuations of both goods. In the experiment, subjects may purchase a private and a public good either separately or in the form of a bundle. The data show superadditivity for bundles of public and private goods, i.e., the willingness to pay for the bundle exceeds the willingness to pay for the two separate goods. By contrast, we find no superadditivity in control treatments with private goods only. We discuss several behavioral concepts in line with our results, as well as implications for fundraisers and firms.
Keywords: Public Goods, Bundling, Valuation, Superadditivity
JEL Classification: C91, D12, H41
Suggested Citation: Suggested Citation