Consider an economy with n consumers, one private good and one public good. We think of...

   

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Consider an economy with n consumers, one private good and one public good. We think of the private good as "all other goods," and measure it in terms of money. There aren individuals in = a; In y + xi, where y is the public good, x; is the private good consumed by individual i = 1,... , n, and 0 < a1 < a2 < < an are parameters. Initial endowment of private good of each consumer is given by w;. We donote the aggregate endowment the economy with utility functions U;(x,, y) of the private good by w = is c(y) = cy for some c > 0. Find the optimal provision of the public good as well as how much is provided under voluntary contributions. E wi. The cost of producing the public good Consider an economy with n consumers, one private good and one public good. We think of the private good as "all other goods," and measure it in terms of money. There aren individuals in = a; In y + xi, where y is the public good, x; is the private good consumed by individual i = 1,... , n, and 0 < a1 < a2 < < an are parameters. Initial endowment of private good of each consumer is given by w;. We donote the aggregate endowment the economy with utility functions U;(x,, y) of the private good by w = is c(y) = cy for some c > 0. Find the optimal provision of the public good as well as how much is provided under voluntary contributions. E wi. The cost of producing the public good

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1 The optimal provision of the public good is given by y ncw 2 Under voluntary contributions each co... View the full answer