Financing public goods by means of lotteries

When viewed as taxes, lotteries are routinely criticized as being both ineq uitable and inefficient. But is this an entirely fair comparison? Frequentl y lotteries are used in lieu of voluntary contributions by private charitie s and governments when taxes are not feasible. When heterogeneous individua ls with quasi-linear preferences participate in lotteries whose proceeds wi ll be used to fund a public good, we find that, relative to voluntary contr ibutions, wagers in the unique lottery equilibrium (a) increase the provisi on of the public good, (b) are welfare improving, and (c) provide levels of the public good close to first-best as the lottery prize increases.