A Flexible Design for Funding Public Goods

TL;DR

This paper introduces a novel funding mechanism inspired by Quadratic Voting that optimally supports decentralized public goods provision, with applications across various societal domains and implications for political philosophy debates.

Contribution

It presents a flexible, quadratic-based funding design that enhances collective organization and addresses classic political philosophy debates.

Findings

Yields first-best public goods provision under standard model

Can limit costs and prevent collusion in funding mechanisms

Applicable to diverse fields like campaign finance and urban projects

Abstract

We propose a design for philanthropic or publicly-funded seeding to allow (near) optimal provision of a decentralized, self-organizing ecosystem of public goods. The concept extends ideas from Quadratic Voting to a funding mechanism for endogenous community formation. Individuals make public goods contributions to projects of value to them. The amount received by the project is (proportional to) the square of the sum of the square roots of contributions received. Under the "standard model" this yields first best public goods provision. Variations can limit the cost, help protect against collusion and aid coordination. We discuss applications to campaign finance, open source software ecosystems, news media finance and urban public projects. More broadly, we offer a resolution to the classic liberal-communitarian debate in political philosophy by providing neutral and non-authoritarian rules that nonetheless support collective organization.