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Public Goods in Endogenous Networks

Author

Listed:
  • Markus Kinateder

    (​University of Navarra)

  • Luca Paolo Merlino

    (Universit e libre de Bruxelles)

Abstract
In this paper we study a local public good game in an endogenous network with heterogeneous agents. We consider two specifications, in which different networks arise. When agents differ in the cost of acquiring the public good, active agents form hierarchical complete multipartite graphs; yet, better types need not have more neighbors. When agents have heterogeneous benefits from the public good, nested split graphs in which investment need not be monotonic in type emerge. In large societies, few agents are active and the network dampens inequality.

Suggested Citation

  • Markus Kinateder & Luca Paolo Merlino, 2015. "Public Goods in Endogenous Networks," Faculty Working Papers 02/15, School of Economics and Business Administration, University of Navarra.
    • Handle: RePEc:una:unccee:wp0215
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    File URL: http://www.unav.edu/documents/29056/7650469/UNAV_0215.pdf
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    Keywords

    public goods;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D00 - Microeconomics - - General - - - General
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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