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On the Private Provision of Public Goods on Networks

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  • Nizar Allouch

    (Queen Mary, University of London, School of Economics and Finance)

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 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 Bramoullé, 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.

Suggested Citation

  • Nizar Allouch, 2012. "On the Private Provision of Public Goods on Networks," Working Papers 2012.40, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2012.40
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    More about this item

    Keywords

    Public Goods; Uniqueness Of Nash Equilibrium; Network Games; Neutrality; Bonacich Centrality; Main Eigenvalue;
    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
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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