  Players allocate their budget to links, a local public good and a private
good. A player links to free ride on others' public good provision. We derive
sufficient conditions for the existence of a Nash equilibrium. In equilibrium,
large contributors link to each other, while others link to them. Poorer
players can be larger contributors if linking costs are sufficiently high. In
large societies, free riding reduces inequality only in networks in which it is
initially low; otherwise, richer players benefit more, as they can afford more
links. Finally, we study the policy implications, deriving income
redistribution that increases welfare and personalized prices that implement
the efficient solution.

Theoretical Economics