DP8607 Private Provision of Public Goods and Information Diffusion in Social Groups

Author(s): Kimberley Scharf
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.