Minimum Contribution Requirement in an Infinitely Repeated Public Goods Game

Abstract

This research studies the impact of minimum contribution requirements on public goods provision in infinitely repeated games. While in static setups such requirements enhance welfare by surpassing non-cooperative Nash equilibria, their effectiveness in dynamic settings where cooperation relies on Nash reversion strategies remains an open question. This study reveals that the introduction of a minimum contribution requirement, positioned between the Nash equilibrium and the agreed cooperative level, hinders long term cooperation among symmetric players, under a quasi-linear and the constant elasticity of substitution (CES) utilities.