Editing Public good (section)

== Local public goods ==
The basic theory of public goods as discussed above begins with situations where the level of a public good (e.g., quality of the air) is equally experienced by everyone. However, in many important situations of interest, the incidence of benefits and costs is not so simple. For example, when people at a workplace keep an office clean or residents [[neighborhood watch|monitor a neighborhood for signs of crime]], the benefits of that effort accrue to some people (those in their ''neighborhoods'') more than to others. The overlapping structure of these neighborhoods is often modeled as a [[Network topology|network]].<ref name="BK">{{Cite journal|last1=Bramoullé|first1=Yann|last2=Kranton|first2=Rachel|date=July 2007|title=Public goods in networks|url=https://linkinghub.elsevier.com/retrieve/pii/S0022053106001220|journal=Journal of Economic Theory|language=en|volume=135|issue=1|pages=478–494|doi=10.1016/j.jet.2006.06.006}}</ref> (When neighborhoods are totally separate, i.e., non-overlapping, the standard model is the [[Tiebout model]].)

[[File:ETS Bus University.jpg|thumb|right|200px|A transit service provides benefits for a wide range of people.]]
An example of locally public good that could help everyone, even ones not from the neighborhood, is a bus service. If one is a college student who is visiting a friend who goes to school in another city that has bus service, one benefits from this bus service just like everyone that resides in and goes to school in said city. There is also a correlation of benefits and costs that one is now a part of. One is benefiting by not having to walk to one's destination by taking a bus instead. However, others might prefer to walk, so they do not become a part of the problems of automobile-exhaust pollution and congestion.

In 2019, economists developed the theory of local public goods with overlapping neighborhoods, or ''public goods in networks'': both their efficient provision, and how much can be provided voluntarily in [[Nash equilibrium|a non-cooperative equilibrium]]. When it comes to socially [[Efficient frontier|efficient]] provision, networks that are more dense or close-knit in terms of how much people can benefit each other have more scope for improving on an inefficient status quo.<ref>{{Cite journal|last1=Elliott|first1=Matthew|last2=Golub|first2=Benjamin|date=2019|title=A Network Approach to Public Goods|url=https://www.journals.uchicago.edu/doi/10.1086/701032|journal=Journal of Political Economy|language=en|volume=127|issue=2|pages=730–776|doi=10.1086/701032|issn=0022-3808|s2cid=158834906}}</ref> On the other hand, voluntary provision is typically below the efficient level, and equilibrium outcomes tend to involve strong specialization, with a few individuals contributing heavily and their neighbors free-riding on those contributions.<ref name="BK" /><ref>{{Cite journal|last1=Galeotti|first1=Andrea|last2=Goyal|first2=Sanjeev|date=September 2010|title=The Law of the Few|url=http://pubs.aeaweb.org/doi/10.1257/aer.100.4.1468|journal=American Economic Review|language=en|volume=100|issue=4|pages=1468–1492|doi=10.1257/aer.100.4.1468|issn=0002-8282}}</ref>