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On the private provision of public goods on networks

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  • Allouch, Nizar

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 of the existence and uniqueness of a Nash equilibrium for general networks and best-reply functions. In addition, we investigate the neutrality result of Warr [38] and Bergstrom, Blume, and Varian [6] whereby consumers are able to undo the impact of income redistribution as well as public provision financed by lump-sum taxes. To this effect, we show that the neutrality result has a limited scope of application beyond a special network architecture in the neighborhood of the set of contributors.

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  • Allouch, Nizar, 2015. "On the private provision of public goods on networks," Journal of Economic Theory, Elsevier, vol. 157(C), pages 527-552.
    • Handle: RePEc:eee:jetheo:v:157:y:2015:i:c:p:527-552
    DOI: 10.1016/j.jet.2015.01.007
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    More about this item

    Keywords

    Public goods; Nash equilibrium; Uniqueness; Networks; Neutrality; Bonacich centrality;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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