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On the Private Provision of Public Goods on Networks

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  • Nizar Allouch

    (Queen Mary, University of London, School of Economics and Finance)

Abstract

This 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 Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2012.40.

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Date of creation: May 2012
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Handle: RePEc:fem:femwpa:2012.40

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Keywords: Public Goods; Uniqueness Of Nash Equilibrium; Network Games; Neutrality; Bonacich Centrality; Main Eigenvalue;

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References

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  1. Sanjeev Goyal, 2007. "Introduction to Connections: An Introduction to the Economics of Networks
    [Connections: An Introduction to the Economics of Networks]
    ," Introductory Chapters, Princeton University Press.
  2. Coralio Ballester & Antoni Calvó-Armengol & Yves Zenou, 2006. "Who's Who in Networks. Wanted: The Key Player," Econometrica, Econometric Society, vol. 74(5), pages 1403-1417, 09.
  3. Luca Corazzini & Ugo Gianazza, 2008. "Unequal Contributions from Symmetric Agents in a Local Interaction Model," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(3), pages 351-370, 06.
  4. Bramoulle, Yann & Kranton, Rachel, 2007. "Public goods in networks," Journal of Economic Theory, Elsevier, vol. 135(1), pages 478-494, July.
  5. Andrea Galeotti & Sanjeev Goyal & Matthew O. Jackson & Fernando Vega-Redondo & Leeat Yariv, 2010. "Network Games," Review of Economic Studies, Oxford University Press, vol. 77(1), pages 218-244.
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Cited by:
  1. repec:van:wpaper:vuecon-sub-12-00008 is not listed on IDEAS
  2. Yann Rébillé & Lionel Richefort, 2012. "Equilibrium Existence and Uniqueness In Network Games with Additive Preferences," Working Papers hal-00732962, HAL.
  3. repec:van:wpaper:vuecon-12-00001 is not listed on IDEAS
  4. Fraser, Clive D., 2012. "Nash equilibrium existence and uniqueness in a club model," Economics Letters, Elsevier, vol. 117(2), pages 496-499.
  5. Clive Fraser, 2012. "Milton Friedman, the Demand for Money and the ECB’s Monetary-Policy Strategy," Discussion Papers in Economics 12/06, Department of Economics, University of Leicester.
  6. Faias, Marta & Moreno, Emma & Wooders, Myrna, 2009. "A Strategic market game approach for the private provision of public goods," MPRA Paper 37777, University Library of Munich, Germany, revised 08 Mar 2012.
  7. Nizar Allouch, 2013. "The Cost of Segregation in Social Networks," Working Papers 703, Queen Mary, University of London, School of Economics and Finance.
  8. repec:van:wpaper:12-00001 is not listed on IDEAS
  9. Yann Rébillé & Lionel Richefort, 2014. "Influence and Social Tragedy in Networks," Working Papers hal-00924017, HAL.
  10. repec:van:wpaper:1201 is not listed on IDEAS

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