TY  - JOUR
AU  - Kotchen,Matthew J.
TI  - Voluntary Provision of Public Goods for Bads: A Theory of Environmental Offsets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13643
PY  - 2007
Y2  - November 2007
UR  - http://www.nber.org/papers/w13643
L1  - http://www.nber.org/papers/w13643.pdf
N1  - Author contact info:
Matthew Kotchen
School of Forestry & Environmental Studies,
School of Management,
and Department of Economics
Yale University
195 Prospect Street
New Haven, CT 06511
Tel: 203/432-9533
Fax: 203/436-9150
E-Mail: matthew.kotchen@yale.edu
AB  - This paper examines voluntary provision of a public good that is motivated, in part, to compensate for other activities that diminish the public good. Markets for environmental offsets, such as those that promote carbon neutrality to minimize the impact of climate change, provide an increasingly salient example. An important result, related to one shown previously, is that mean donations to the public good do not converge to zero as the economy grows large. Other results are new and comparable to those from the standard model of a privately provided public good. The Nash equilibrium is solved explicitly to show how individual direct donations and net contributions depend on wealth and heterogenous preferences. Comparative static analysis demonstrates how the level of the public good and social welfare depend on the technology, individual wealth, and an initial level of the public good. Application of the model in an environmental context establishes a starting point for understanding and making predictions about markets such as those for carbon offsets.
ER  -