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 Bramoull�, 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 Queen Mary, University of London, School of Economics and Finance in its series Working Papers with number 689.
Date of creation: Feb 2012
Date of revision:
Public goods; Uniqueness of Nash equilibrium; Network games; Neutrality; Bonacich centrality; Main eigenvalue;
Find related papers by JEL classification:
- 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-2012-03-08 (All new papers)
- NEP-GTH-2012-03-08 (Game Theory)
- NEP-MIC-2012-03-08 (Microeconomics)
- NEP-NET-2012-03-08 (Network Economics)
- NEP-PUB-2012-03-08 (Public Finance)
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