Value of collective consumption goods

Abstract

The goal of this paper is to develop the theoretical framework of the public goods provision. This theoretic contribution is based on the critical analysis of mainstream economics theories dealing with public goods as market failure (neoclassical economics and neoliberalism) and on the results of own economic experiment examining the "free-riding" behaviour in the voluntary provision of public goods. The "free rider" problem is one of the main reasons for government intervention in the market. However, there is an inefficiency of public decision making on public provision and financing of selected goods because of the estimating goods values (ex-post consumer utility) problem. Moreover, the results of economic experiments do not support the pure "free rider" theory. However, the economic experiment simulates the real public good consumption that is why this paper contains also the survey of consumers' willingness to pay for specific public goods (public library services) in real terms based on the methodology of contingent valuation method.