On the Private Provision of Public Goods on Networks
AbstractThis paper analyzes the private provision of public goods where consumers interact within a fixed network structure and may benefit only from their direct neighbors’ provisions. We present a proof for existence and uniqueness of a Nash equilibrium with general best-reply functions. Our uniqueness result simultaneously extends similar results in Bergstrom, Blume, and Varian (1986) on the private provision of public goods to networks and Bramoullé, Kranton, and D'Amours (2011) on games of strategic substitutes to nonlinear best-reply functions. In addition, we investigate the neutrality result of Warr (1983) and Bergstrom, Blume, and Varian (1986) whereby consumers are able to offset income redistributions and tax-financed government contributions. To this effect, we establish that the neutrality result has a limited scope of application beyond regular networks.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2012.40.
Date of creation: May 2012
Date of revision:
Public Goods; Uniqueness Of Nash Equilibrium; Network Games; Neutrality; Bonacich Centrality; Main Eigenvalue;
Other versions of this item:
- Nizar Allouch, 2012. "On the Private Provision of Public Goods on Networks," Working Papers 689, Queen Mary, University of London, School of Economics and Finance.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-25 (All new papers)
- NEP-GTH-2012-06-25 (Game Theory)
- NEP-MIC-2012-06-25 (Microeconomics)
- NEP-NET-2012-06-25 (Network Economics)
- NEP-PUB-2012-06-25 (Public Finance)
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