The Cost of Segregation in Social Networks
AbstractThis paper investigates the private provision of public goods in segregated societies. While most research agrees that segregation undermines public provision, the findings are mixed for private provision: social interactions, being strong within groups and limited across groups, may either increase or impede voluntary contributions. Moreover, although efficiency concerns generally provide a rationale for government intervention, surprisingly, little light is shed in the literature on the potential effectiveness of such intervention in a segregated society. This paper first develops an index based on social interactions, which, roughly speaking, measures the welfare impact of income redistribution in an arbitrary society. It then shows that the proposed index vanishes when applied to large segregated societies, which suggests an "asymptotic neutrality" of redistributive policies.
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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 703.
Date of creation: May 2013
Date of revision:
Public goods; Segregated society; Private provision; Networks; Bonacich transfer index;
Other versions of this item:
- 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-2013-05-11 (All new papers)
- NEP-EVO-2013-05-11 (Evolutionary Economics)
- NEP-GTH-2013-05-11 (Game Theory)
- NEP-NET-2013-05-11 (Network Economics)
- NEP-PBE-2013-05-11 (Public Economics)
- NEP-SOC-2013-05-11 (Social Norms & Social Capital)
- NEP-URE-2013-05-11 (Urban & Real Estate Economics)
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