A network approach to public goods

Matthew Elliott, Benjamin Golub

Research output: Contribution to journalArticlepeer-review

7 Scopus citations

Abstract

Suppose that agents can exert costly effort that creates nonrival, heterogeneous benefits for each other. At each possible outcome, a weighted, directed network describing marginal externalities is defined. We show that Pareto efficient outcomes are those at which the largest eigenvalue of the network is 1. An important set of efficient so-lutions—Lindahl outcomes—are characterized by contributions being proportional to agents’ eigenvector centralities in the network. The outcomes we focus on are motivated by negotiations. We apply the results to identify who is essential for Pareto improvements, how to efficiently subdivide negotiations, and whom to optimally add to a team.

Original languageEnglish (US)
Pages (from-to)730-776
Number of pages47
JournalJournal of Political Economy
Volume127
Issue number2
DOIs
StatePublished - Apr 1 2019
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics

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