The Samuelson condition and the Lindahl scheme in networks

We study optimal provision of public goods in the network, showing that the Samuelson condition and the Lindahl scheme can both be substantially extended to characterize the expenditure on such public goods. Couched in terms of the structure of the network, the extended Samuelson condition and Lindahl scheme formulate precisely how the local publicness of a local public good fundamentally determines its optimal provision and the personalized price that the Lindahl tax-payer faces. Independence of the optimal allocation from the distribution of resources at interior Samuelsonian solutions in the network generally fails to hold even for the Bergstrom-Cornes preferences.