Private Provision of Public Goods and Information Diffusion in Social Groups

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Abstract

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.

Details

Original languageEnglish
Pages (from-to)1019-1042
Number of pages24
JournalInternational Economic Review
Volume55
Issue number4
Early online date28 Oct 2014
Publication statusPublished - 1 Nov 2014

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