The cost of segregation in (social) networks

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. (C) 2017 The Author. Published by Elsevier Inc. This is an open access article under the CC Keywords: BY license (http://creativecommons.org/licenses/by/4.0/).