Public Goods in Endogenous Networks

Markus Kinateder and Luca Merlino

American Economic Journal: Microeconomics, 2017, vol. 9, issue 3, 187-212

Abstract: We study a local public good game in an endogenous network with heterogeneous players. The source of heterogeneity affects the gains from a connection and hence equilibrium networks. When players differ in the cost of producing the public good, active players form pyramidal complete multipartite graphs; yet, better types need not have more neighbors. When players differ in the valuation of the public good, nested split graphs emerge in which production need not be monotonic in type. In large societies, few players produce a lot; furthermore, networks dampen inequality under cost heterogeneity and increase it under heterogeneity in valuation.

JEL-codes: D63 D85 H41 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/mic.20140276
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Citations: View citations in EconPapers (43)

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Working Paper: Public Goods in Endogenous Networks (2015)
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