Public goods in networks
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This paper considers incentives to provide goods that are non-excludable along social or geographic links. We find, first, that networks can lead to specialization in public good provision. In every social network there is an equilibrium where some individuals contribute and others free ride. In many networks, this extreme is the only outcome. Second, specialization can benefit society as a whole. This outcome arises when contributors are linked, collectively, to many agents. Finally, a new link increases access to public goods, but reduces individual incentives to contribute. Hence, overall welfare can be higher when there are holes in a network. © 2006 Elsevier Inc. All rights reserved.
Published Version (Please cite this version)10.1016/j.jet.2006.06.006
Publication InfoBramoullé, Y; & Kranton, R (2007). Public goods in networks. Journal of Economic Theory, 135(1). pp. 478-494. 10.1016/j.jet.2006.06.006. Retrieved from https://hdl.handle.net/10161/1943.
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James B. Duke Distinguished Professor of Economics
Rachel Kranton studies how institutions and the social setting affect economic outcomes. She develops theories of networks and has introduced identity into economic thinking. Her research contributes to many fields including microeconomics, economic development, and industrial organization. In Identity Economics, Rachel Kranton and collaborator George Akerlof, introduce a general framework to study social norms and identity in economics. In the economics of networks, Rachel Kranton develop