Private Provision of Public Goods and Information Diffusion in Social Groups
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Colleges, School and Institutes
I describe a dynamic model of costly information sharing where private information affecting collective-value actions is transmitted by social proximity. Individuals make voluntary contributions toward 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. I show that unlike in the case of private goods, better informed individuals face positive incentives to incur a cost to share information with their neighbors and that these incentives are stronger and provision of the pure public good greater the smaller are individuals' social neighborhoods.
|Number of pages||24|
|Journal||International Economic Review|
|Early online date||28 Oct 2014|
|Publication status||Published - 1 Nov 2014|