Welfare targeting in networks

This paper investigates welfare targeting for public goods in networks. First, we show that a tax/subsidy scheme (not necessarily budget-balanced) affects each consumer only insofar as it his neighbourhood. Second, either Pareto-improving income redistribution can be found or there exist Negishi weights, which relate to the network structure. Third, case of Cobb–Douglas preferences, Law Welfare Targeting holds and links two well-known notions comparative statics policy interventions: neutrality paradoxical effects. Collectively, our findings uncover importance − 1 eigenvalue economic social policy: is an indication how consumers absorb impact redistribution.