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Social network structure and government provision crowding-out on voluntary contributions

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  • Chih, Yao-Yu

Abstract

We propose a general equilibrium model of voluntary contributions in which people have an individual-specific level for social approval. This heterogeneous setting has evolved from the different degree of social interaction of individuals in the exogenously given network. By extending the techniques developed by Ghiglino and Goyal (2010), we show that, given a network, individuals who face higher standards of social norms contribute more to the public good and are simultaneously less sensitive to government provision crowding-out in relative value. When comparing different networks, we show that government provision is more effective in networks with higher average connectivity because of a lesser crowding-out effect.

Suggested Citation

  • Chih, Yao-Yu, 2016. "Social network structure and government provision crowding-out on voluntary contributions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 63(C), pages 83-90.
  • Handle: RePEc:eee:soceco:v:63:y:2016:i:c:p:83-90
    DOI: 10.1016/j.socec.2016.05.008
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    More about this item

    Keywords

    Social networks; Voluntary contributions; Norm-based motivation; Social approval; Crowding-out effect;

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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