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Private Provision of Public Goods and Information Diffusion in Social Groups

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  • Kimberley Ann Scharf

Abstract

We describe a dynamic model of costly information sharing, where private information affecting collective-value actions is transmitted by social proximity. Individuals make voluntary contributions towards the provision of a pure public good, and information transmission about quality of provision is a necessary condition for collective provision to take place in a stationary equilibrium. We show that, unlike in the case of private goods, better informed individuals face positive incentives to incur a cost to share information with their neighbours; and that these incentives are stronger, and provision of the pure public good greater, the smaller are individuals’ social neighbourhoods.

Suggested Citation

  • Kimberley Ann Scharf, 2013. "Private Provision of Public Goods and Information Diffusion in Social Groups," CESifo Working Paper Series 4492, CESifo.
  • Handle: RePEc:ces:ceswps:_4492
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    References listed on IDEAS

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    1. Gale, Douglas & Kariv, Shachar, 2003. "Bayesian learning in social networks," Games and Economic Behavior, Elsevier, vol. 45(2), pages 329-346, November.
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    6. Chatterjee, Kalyan & Dutta, Bhaskar, 2011. "Credibility and Strategic Learning in Networks," Economic Research Papers 270752, University of Warwick - Department of Economics.
    7. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
    8. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
    9. Bramoulle, Yann & Kranton, Rachel, 2007. "Public goods in networks," Journal of Economic Theory, Elsevier, vol. 135(1), pages 478-494, July.
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    Cited by:

    1. Scharf, Kimberley & Smith, Sarah, 2014. "Relational Warm Glow and Giving in Social Groups," CEPR Discussion Papers 10051, C.E.P.R. Discussion Papers.
    2. repec:bri:cmpowp:13/327 is not listed on IDEAS
    3. Scharf, Kimberley & Smith, Sarah, 2016. "Relational altruism and giving in social groups," Journal of Public Economics, Elsevier, vol. 141(C), pages 1-10.

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    More about this item

    Keywords

    private provision of public goods; information transmission; social learning;
    All these keywords.

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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