Pay for the Privilege : Does a Global Club Good Opportunity Ruin Local Public Good Provision?

This paper examines the effects of a global club good opportunity on local public good provision when interactions are indefinitely repeated linear public good game setting with a voluntary contribution mechanism. In particular, the study varies the global club entry cost and the local community endowment composition to determine the impact of these factors on cooperation and welfare. When the entry cost is low, the majority of subjects join the global club, leading to improved total welfare for both homogeneous and heterogeneous communities. When the entry cost is high, fewer participants join the club, resulting in decreased total welfare. In homogenous communities, those who join the club benefit from the opportunity, while in heterogeneous communities, participants ignore the opportunity and revert to cooperating in their local public good. In addition to the human subject experiment, counterfactual simulations based on individual evolutionary learning model were carried out to show that the global club good opportunity is only welfare-improving when it yields sufficiently large social benefits compared to the local public good