Journal of Evolutionary Economics

, Volume 26, Issue 1, pp 195–218 | Cite as

Social network and private provision of public goods

  • Bulat SanditovEmail author
  • Saurabh Arora
Regular Article


Using a simple model with interdependent utilities, we study how social networks influence individual voluntary contributions to the provision of a public good. Departing from the standard model of public good provision, we assume that an agent’s utility has two terms: (a) ‘ego’-utility derived from the agent’s consumption of public and private goods, and (b) a social utility which is the sum of utility spillovers from other agents with whom the agent has social relationships. We establish conditions for the existence of a unique interior Nash equilibrium and describe the equilibrium in terms of network characteristics. We show that social network always has a positive effect on the provision of the public good. We also find that, in networks with “small world”-like modular structures, ‘bridging’ ties connecting distant parts of social network play an important role inducing an agent’s contribution to public good. Assumptions and results of the model are discussed in relation to the role of social capital in community-level development projects and to the effect of innovation networks on firms’ R&D investments.


Public goods Interrelated utilities Social capital Social network analysis Bonding and bridging R&D networks 

JEL Classification

H41 D85 O31 



We are grateful to two anonymous referees and the guest editor, Zakaria Babutsidze, for valuable comments. Previous versions have benefitted from generous input provided by Francesco Lissoni, Uwe Cantner, Mauro Napoletano and the participants of EMAEE’13, WEHIA’13, GCW’13 conferences, the GREThA seminar at University of Bordeaux and Jena Economic Research Seminar at Friedrich Schiller University. The usual disclaimer applies.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2015

Authors and Affiliations

  1. 1.TELECOM Ecole de ManagementInstitut Mines-TélécomEvry CedexFrance
  2. 2.Science Policy Research UnitUniversity of SussexBrightonUK

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