IDEAS home Printed from https://ideas.repec.org/a/eee/gamebe/v106y2017icp329-342.html
   My bibliography  Save this article

The cost of segregation in (social) networks

Author

Listed:
  • Allouch, Nizar

Abstract

This paper investigates the welfare effect of income redistribution in the private provision of public goods on networks. We first show that the welfare effect of income redistribution is determined by Bonacich centrality. Then we develop an index based on the network structure of interactions, which, roughly speaking, measures the welfare effect of income redistribution confined to a component of contributors. The proposed index vanishes when applied to large components of contributors that display special segregated interactions, which suggests an “asymptotic neutrality” of redistributive policies.

Suggested Citation

  • Allouch, Nizar, 2017. "The cost of segregation in (social) networks," Games and Economic Behavior, Elsevier, vol. 106(C), pages 329-342.
    • Handle: RePEc:eee:gamebe:v:106:y:2017:i:c:p:329-342
    DOI: 10.1016/j.geb.2017.08.012
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S089982561730146X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.geb.2017.08.012?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Yann Bramoull? & Rachel Kranton & Martin D'Amours, 2014. "Strategic Interaction and Networks," American Economic Review, American Economic Association, vol. 104(3), pages 898-930, March.
    2. Bramoullé, Yann & Currarini, Sergio & Jackson, Matthew O. & Pin, Paolo & Rogers, Brian W., 2012. "Homophily and long-run integration in social networks," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1754-1786.
    3. Allouch, Nizar, 2015. "On the private provision of public goods on networks," Journal of Economic Theory, Elsevier, vol. 157(C), pages 527-552.
    4. Acemoglu, Daron & Malekian, Azarakhsh & Ozdaglar, Asu, 2016. "Network security and contagion," Journal of Economic Theory, Elsevier, vol. 166(C), pages 536-585.
    5. Bernheim, B Douglas, 1986. "On the Voluntary and Involuntary Provision of Public Goods," American Economic Review, American Economic Association, vol. 76(4), pages 789-793, September.
    6. Saygin, Perihan & Weber, Andrea & Weynandt, Michèle, 2014. "Coworkers, Networks, and Job Search Outcomes," IZA Discussion Papers 8174, Institute of Labor Economics (IZA).
    7. Fernández, Raquel & Levy, Gilat, 2008. "Diversity and redistribution," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 925-943, June.
    8. Christian Ghiglino & Sanjeev Goyal, 2010. "Keeping Up with the Neighbors: Social Interaction in a Market Economy," Journal of the European Economic Association, MIT Press, vol. 8(1), pages 90-119, March.
    9. Yann Bramoullé & Rachel Kranton, 2015. "Games Played on Networks," AMSE Working Papers 1530, Aix-Marseille School of Economics, France.
    10. Christina M. Fong & Erzo F. P. Luttmer, 2009. "What Determines Giving to Hurricane Katrina Victims? Experimental Evidence on Racial Group Loyalty," American Economic Journal: Applied Economics, American Economic Association, vol. 1(2), pages 64-87, April.
    11. Renaud Bourlès & Yann Bramoullé & Eduardo Perez‐Richet, 2017. "Altruism in Networks," Econometrica, Econometric Society, vol. 85, pages 675-689, March.
    12. Coralio Ballester & Antoni Calvó-Armengol & Yves Zenou, 2006. "Who's Who in Networks. Wanted: The Key Player," Econometrica, Econometric Society, vol. 74(5), pages 1403-1417, September.
    13. Daron Acemoglu & Vasco M. Carvalho & Asuman Ozdaglar & Alireza Tahbaz‐Salehi, 2012. "The Network Origins of Aggregate Fluctuations," Econometrica, Econometric Society, vol. 80(5), pages 1977-2016, September.
    14. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1203-1250.
    15. Timothy Besley & Rohini Pande & Lupin Rahman & Vijayendra Rao, 2004. "The Politics of Public Good Provision: Evidence from Indian Local Governments," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 416-426, 04/05.
    16. Meta Brown & Elizabeth Setren & Giorgio Topa, 2016. "Do Informal Referrals Lead to Better Matches? Evidence from a Firm's Employee Referral System," Journal of Labor Economics, University of Chicago Press, vol. 34(1), pages 161-209.
    17. Francis Bloch & Unal Zenginobuz, 2007. "The effect of spillovers on the provision of local public goods," Review of Economic Design, Springer;Society for Economic Design, vol. 11(3), pages 199-216, November.
    18. Andrea Galeotti & Sanjeev Goyal, 2010. "The Law of the Few," American Economic Review, American Economic Association, vol. 100(4), pages 1468-1492, September.
    19. Allouch, Nizar, 2015. "On the private provision of public goods on networks," Journal of Economic Theory, Elsevier, vol. 157(C), pages 527-552.
    20. Daron Acemoglu & Camilo García-Jimeno & James A. Robinson, 2015. "State Capacity and Economic Development: A Network Approach," American Economic Review, American Economic Association, vol. 105(8), pages 2364-2409, August.
    21. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    22. Andrea Galeotti & Sanjeev Goyal & Matthew O. Jackson & Fernando Vega-Redondo & Leeat Yariv, 2010. "Network Games," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(1), pages 218-244.
    23. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-493, May.
    24. Sergio Currarini & Matthew O. Jackson & Paolo Pin, 2009. "An Economic Model of Friendship: Homophily, Minorities, and Segregation," Econometrica, Econometric Society, vol. 77(4), pages 1003-1045, July.
    25. Warr, Peter G., 1983. "The private provision of a public good is independent of the distribution of income," Economics Letters, Elsevier, vol. 13(2-3), pages 207-211.
    26. Jacob L. Vigdor, 2004. "Community Composition and Collective Action: Analyzing Initial Mail Response to the 2000 Census," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 303-312, February.
    27. Miguel, Edward & Gugerty, Mary Kay, 2005. "Ethnic diversity, social sanctions, and public goods in Kenya," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2325-2368, December.
    28. Abhijit Banerjee & Lakshmi Iyer & Rohini Somanathan, 2005. "History, Social Divisions, and Public Goods in Rural India," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 639-647, 04/05.
    29. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    30. James M. Poterba, 1997. "Demographic structure and the political economy of public education," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 16(1), pages 48-66.
    31. Hiller, Timo, 2017. "Peer effects in endogenous networks," Games and Economic Behavior, Elsevier, vol. 105(C), pages 349-367.
    32. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(4), pages 1243-1284.
    33. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
    34. Markus Kinateder & Luca Paolo Merlino, 2017. "Public Goods in Endogenous Networks," American Economic Journal: Microeconomics, American Economic Association, vol. 9(3), pages 187-212, August.
    35. Yann Rébillé & Lionel Richefort, 2012. "Welfare Analysis in Games with substitutabilities," Working Papers hal-00732950, HAL.
    36. Benjamin Golub & Matthew O. Jackson, 2012. "How Homophily Affects the Speed of Learning and Best-Response Dynamics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(3), pages 1287-1338.
    37. Rahmi İlkılıç, 2011. "Networks of common property resources," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 47(1), pages 105-134, May.
    38. Günther, Michael & Hellmann, Tim, 2017. "International environmental agreements for local and global pollution," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 38-58.
    39. Bloch, Francis & Zenginobuz, E. Unal, 2006. "Tiebout equilibria in local public good economies with spillovers," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1745-1763, September.
    40. Belhaj, Mohamed & Deroïan, Frédéric, 2012. "Risk taking under heterogenous revenue sharing," Journal of Development Economics, Elsevier, vol. 98(2), pages 192-202.
    41. Bramoulle, Yann & Kranton, Rachel, 2007. "Public goods in networks," Journal of Economic Theory, Elsevier, vol. 135(1), pages 478-494, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bayer, Péter & Herings, P. Jean-Jacques & Peeters, Ronald, 2021. "Farsighted manipulation and exploitation in networks," Journal of Economic Theory, Elsevier, vol. 196(C).
    2. Toomas Hinnosaar, 2019. "Price Setting on a Network," Papers 1904.06757, arXiv.org.
    3. Nizar Allouch & Jayeeta Bhattacharya, 2021. "The Key Class in Networks," Studies in Economics 2110, School of Economics, University of Kent.
    4. Christophe Bravard & Sudipta Sarangi & ANNE NOUWELAND & MARCO SLIKKER, 2016. "The Position Value for Partition Function Form Network Games," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(2), pages 226-247, April.
    5. Allouch, Nizar & King, Maia, 2021. "Welfare targeting in networks," Journal of Mathematical Economics, Elsevier, vol. 96(C).
    6. Mohanty, Sambit & Rao, K.S. Mallikarjuna & Roy, Jaideep, 2024. "Kantian imperatives in public goods networks," Journal of Economic Behavior & Organization, Elsevier, vol. 224(C), pages 194-214.
    7. Meléndez-Jiménez, Miguel A. & Polanski, Arnold, 2020. "Dirty neighbors — Pollution in an interlinked world," Energy Economics, Elsevier, vol. 86(C).
    8. Ying Chen & Tom Lane & Stuart McDonald, 2023. "Endogenous Network Formation in Local Public Goods: An Experimental Analysis," Discussion Papers 2023-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    9. Matthew Elliott & Benjamin Golub, 2019. "A Network Approach to Public Goods," Journal of Political Economy, University of Chicago Press, vol. 127(2), pages 730-776.
    10. Walsh, A. M., 2019. "Games on Multi-Layer Networks," Cambridge Working Papers in Economics 1954, Faculty of Economics, University of Cambridge.
    11. King, Maia & Tarbush, Bassel & Teytelboym, Alexander, 2019. "Targeted carbon tax reforms," European Economic Review, Elsevier, vol. 119(C), pages 526-547.
    12. Nizar Allouch & Maia King, 2019. "Constrained public goods in networks," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 21(5), pages 895-902, October.
    13. Gerke, Stefanie & Gutin, Gregory & Hwang, Sung-Ha & Neary, Philip R., 2024. "Public goods in networks with constraints on sharing," Journal of Economic Theory, Elsevier, vol. 219(C).
    14. Kinateder, Markus & Merlino, Luca Paolo, 2022. "Local public goods with weighted link formation," Games and Economic Behavior, Elsevier, vol. 132(C), pages 316-327.
    15. Dike Chukwudi Henry, 2021. "Network Games, Peer Effect and Neutral Transfers," Studies in Economics 2107, School of Economics, University of Kent.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Allouch, Nizar, 2017. "The cost of segregation in (social) networks," Games and Economic Behavior, Elsevier, vol. 106(C), pages 329-342.
    2. Nizar Allouch & Maia King, 2019. "Constrained public goods in networks," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 21(5), pages 895-902, October.
    3. Jackson, Matthew O. & Zenou, Yves, 2015. "Games on Networks," Handbook of Game Theory with Economic Applications,, Elsevier.
    4. Allouch, Nizar & King, Maia, 2021. "Welfare targeting in networks," Journal of Mathematical Economics, Elsevier, vol. 96(C).
    5. Kinateder, Markus & Merlino, Luca Paolo, 2023. "Free riding in networks," European Economic Review, Elsevier, vol. 152(C).
    6. Allouch, Nizar, 2015. "On the private provision of public goods on networks," Journal of Economic Theory, Elsevier, vol. 157(C), pages 527-552.
    7. Klaus Desmet & Ignacio Ortuño-Ortín & Romain Wacziarg, 2009. "The political economy of ethnolinguistic cleavages," Working Papers 2009-17, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
    8. Lionel Richefort, 2018. "Warm-glow giving in networks with multiple public goods," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(4), pages 1211-1238, November.
    9. Desmet, Klaus & Ortuño-Ortín, Ignacio & Wacziarg, Romain, 2012. "The political economy of linguistic cleavages," Journal of Development Economics, Elsevier, vol. 97(2), pages 322-338.
    10. Kinateder, Markus & Merlino, Luca Paolo, 2022. "Local public goods with weighted link formation," Games and Economic Behavior, Elsevier, vol. 132(C), pages 316-327.
    11. Andreoni, James & Payne, A. Abigail & Smith, Justin & Karp, David, 2016. "Diversity and donations: The effect of religious and ethnic diversity on charitable giving," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 47-58.
    12. Rébillé, Yann & Richefort, Lionel, 2014. "Equilibrium existence and uniqueness in network games with additive preferences," European Journal of Operational Research, Elsevier, vol. 232(3), pages 601-606.
    13. Hungerman, Daniel M., 2009. "Crowd-out and diversity," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 729-740, June.
    14. Hiller, Timo, 2022. "A simple model of network formation with competition effects," Journal of Mathematical Economics, Elsevier, vol. 99(C).
    15. Yao-Yu Chih, 2018. "Status competition and benevolence in social networks," Oxford Economic Papers, Oxford University Press, vol. 70(1), pages 141-162.
    16. Kotera, Go & Mizuno, Nobuhiro & Okada, Keisuke & Samreth, Sovannroeun, 2015. "Ethnic diversity, democracy, and health: Theory and evidence," Research in Economics, Elsevier, vol. 69(3), pages 353-376.
    17. Nikolaj A. Harmon, 2010. "The End of the European Welfare States? Migration, Ethnic Diversity and Public Goods," Working Papers 1277, Princeton University, Department of Economics, Industrial Relations Section..
    18. Markus Kinateder & Luca Paolo Merlino, 2021. "The Evolution of Networks and Local Public Good Provision: A Potential Approach," Games, MDPI, vol. 12(3), pages 1-12, July.
    19. He, Quqiong & Pan, Ying & Sarangi, Sudipta, 2018. "Lineage-based heterogeneity and cooperative behavior in rural China," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 248-269.
    20. Dimitrova-Grajzl Valentina & Grajzl Peter & Guse A. Joseph & Smith J. Taylor, 2016. "Racial Group Affinity and Religious Giving: Evidence from Congregation-Level Panel Data," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(2), pages 689-725, April.

    More about this item

    Keywords

    Public goods; Income redistribution; Welfare effect; Networks; Bonacich transfer index;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:gamebe:v:106:y:2017:i:c:p:329-342. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.