The Private Provision of Public Goods: Tests of a Provision Point Mechanism for Funding Green Power Programs
Rose, Steven K.; Clark, Jeremy; Poe, Gregory L.; Rondeau, Daniel; Schulze, William D.
This paper utilizes laboratory and field experiments to test the use of a provision point mechanism to finance renewable energy programs, commonly known as green pricing programs. The mechanism solicits discrete contributions towards a provision threshold using a money-back guarantee for insufficient contributions and extended benefits for contributions in excess of the threshold. In the laboratory, a single shot environment with a large group of potential participants produces contribution levels that are found to be partially demand revealing as well as motivated by altruism or wann-glow. Also, in contrast to most green pricing programs, relatively high participation is found in the field. Field participation is shown to be responsive to program goals and the provision point mechanism.
WP 1999-26 October 1999JEL Classification Codes: H41; C92; C93
Charles H. Dyson School of Applied Economics and Management, Cornell University