DP8607 Private Provision of Public Goods and Information Diffusion in Social Groups
|Publication Date:||October 2011|
|Keyword(s):||private provision of public goods, social learning|
|JEL(s):||D6, D7, H1, L3|
|Programme Areas:||Public Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=8607|
We describe a model of fundraising in social groups, where private information about quality of provision is transmitted by social proximity. Individuals engage in voluntary provision of a pure collective good that is consumed by both neighbors and non-neighbors. We 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. These incentives are stronger, and provision of the pure public good greater, the smaller are individuals? social neighborhoods.