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A Network Approach to Public Goods

Accepted version
Peer-reviewed

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Type

Article

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Authors

Golub, Benjamin 

Abstract

Suppose agents can exert costly effort that creates nonrival, heterogeneous benefits for each other. At each possible outcome, a weighted, directed network describing marginal externalities is defined. We show that Pareto efficient outcomes are those at which the largest eigenvalue of the network is 1. An important set of efficient solutions---Lindahl outcomes---are characterized by contributions being proportional to agents' eigenvector centralities in the network. The outcomes we focus on are motivated by negotiations. We apply the results to identify who is essential for Pareto improvements, how to efficiently subdivide negotiations, and whom to optimally add to a team.

Description

Keywords

38 Economics, 35 Commerce, Management, Tourism and Services

Journal Title

Journal of Political Economy

Conference Name

Journal ISSN

0022-3808
1537-534X

Volume Title

127

Publisher

University of Chicago Press
Sponsorship
European Research Council (757229)