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Social network and private provision of public goods
Version 2 2023-06-12, 06:36
Version 1 2023-06-08, 23:15
journal contribution
posted on 2023-06-12, 06:36 authored by Bulat Sanditov, Saurabh AroraSaurabh AroraUsing a simple model with interdependent utilities, we study how social networks influence individual voluntary contributions to the provision of a public good. Departing from the standard model of public good provision, we assume that an agent’s utility has two terms: (a) ‘ego’-utility derived from the agent’s consumption of public and private goods, and (b) a social utility which is the sum of utility spillovers from other agents with whom the agent has social relationships. We establish conditions for the existence of a unique interior Nash equilibrium and describe the equilibrium in terms of network characteristics. We show that social network always has a positive effect on the provision of the public good. We also find that, in networks with “small world”-like modular structures, ‘bridging’ ties connecting distant parts of social network play an important role inducing an agent’s contribution to public good. Assumptions and results of the model are discussed in relation to the role of social capital in community-level development projects and to the effect of innovation networks on firms’ R&D investments.
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Publication status
- Published
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- Published version
Journal
Journal of Evolutionary EconomicsISSN
0936-9937Publisher
Springer VerlagExternal DOI
Issue
1Volume
26Page range
195-218Department affiliated with
- SPRU - Science Policy Research Unit Publications
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- No
Peer reviewed?
- Yes
Legacy Posted Date
2015-11-23First Compliant Deposit (FCD) Date
2021-03-05Usage metrics
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