On the private provision of public goods on networks

This paper analyzes the private provision of public goods where consumers interact within a fixed network structure and may benefit only from their direct neighbours' provisions. We present a proof of the existence and uniqueness of a Nash equilibrium for general networks and best-reply functions. In addition, we investigate the neutrality result of Warr (1983) and Bergstrom, Blume, and Varian (1986) whereby consumers are able to undo the impact of income redistribution as well as public provision financed by lump-sum taxes. To this effect, we show that the neutrality result has a limited scope of application beyond a special network architecture in the neighborhood of the set of contributors.