A Theory of Voluntary Pooled Public Knowledge Goods and Coalition Formation
Abstract: In this paper we develop a theoretical model of the mechanisms behind the voluntary provision of impure public goods in coalitions in presence of important social networks effects. The model builds on the large empirical literature on coalitions for voluntary provision of pooled public knowledge goods, such as in social networks of open source software developers and consortia producing open data repositories. This literature shows that, under some conditions, the provision of public goods can be facilitated by social network effects such as group identity and social approval of individual pro-social attitudes. To integrate these effects in standard public good theory this paper follows a two-step strategy, based on the introduction of two types of “impureness” in standard public good theory: (1) impureness related to private excludable benefits (so-called ancillary private benefits of the public good); (2) impureness related to the satisfaction of the individuals’ social preferences. In a first step, the paper analyses the introduction of combined public and private benefits in coalition theory with standard preferences. In a second step the model is broadened to the case of impureness related to the social preferences. The analysis shows that, when the private benefit component of the impure public good is important, the effect of the social preferences on the coalition formation is ambiguous: with increasing/decreasing relative weight of the social approval of individual pro-social attitudes compared to the relative weight of the social group identity, the coalition size to be reached will be respectively larger/smaller compared to the coalitions formed by agents with standard preferences. Applications of the theoretical model to large-scale surveys of Free/Libre/Open-Source (FLOSS) software developers confirm the results of the model.
