A Theoretical Approach to the Study of Optimal Public Goods and Olson Conjecture

Abstract

The free-riders’ problem associated with the Olson conjecture increases with the size of the group, is based on non-zero conjectural variation explained through the public goods model involving Non-Nash behavior pattern. A hybrid solution between Kantian behavior and Nashian behavior is emerged when we look at the elasticity of the conjectured response with respect to the relative importance of the individual’s contribution.  When the number of contributors in the community for the provision of public goods increases infinitely, the path that emerges through hybridization converges to that of the Nash type.  This convergence holds for all elasticity of conjectured response, which is greater than or equal to one.  The larger is the elasticity of conjectured response, the faster will be the rate of convergence and thus free-riding.