Optimal Allocation of Limited Funds in Quadratic Funding
Ricardo A. Pasquini
TL;DR
This paper analyzes a variation of Quadratic Funding called Capital Constrained Quadratic Funding, demonstrating it can achieve socially optimal allocation of limited public funds among projects.
Contribution
It introduces and proves the effectiveness of a constrained version of Quadratic Funding that allocates limited funds optimally among public projects.
Findings
Mechanism achieves socially optimal allocation
Limited funds are distributed efficiently among projects
Supports effective public good funding strategies
Abstract
We examine the allocation of a limited pool of matching funds to public good projects using Quadratic Funding. In particular, we consider a variation of the Capital Constrained Quadratic Funding (CQF) mechanism proposed by Buterin, Hitzig and Weyl (2019) where only funds in the matching pool are distributed among projects. We show that this mechanism achieves a socially optimal allocation of limited funds.
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Taxonomy
TopicsEconomic theories and models · Fiscal Policy and Economic Growth · Housing Market and Economics