Abstract

We develop a model of voluntary contributions to a public good in a large economy where peoples' preferences consist of extrinsic and intrinsic payoffs. The model considers (i) the interplay between the two payoffs and (ii) the possibility that public provision discourages moral motivation in the intrinsic payoff (motivational shift). We show that a wide variety of crowd-out/in occurs due to public provision within a single framework, and its occurrence depends on the magnitude of motivational shift and the characteristics of the public good in relation to private goods in the extrinsic payoff.