Privately provided public goods in a dynamic economy
AbstractWe show that when individuals can save (accumulate capital), they all eventually become public-good contributors. In steady state, larger economies have more contributors. If the public good is normal, then its quantity increases in population size in the open-loop equilibrium, but not necessarily in the feedback equilibrium. If both private and public goods are normal, then the open-loop equilibrium exhibits greater steady-state public provision than the feedback equilibrium. If private consumption is inferior the opposite is true. Interpreting individuals as countries, our findings suggest that all countries over time will become contributors toward a global public good.
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Bibliographic InfoPaper provided by Durham University Business School in its series Working Papers with number 2010_02.
Date of creation: 01 Jan 2010
Date of revision:
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More information through EDIRC
private provision; public goods; dynamic; intertemporal; differential game;
Find related papers by JEL classification:
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- H40 - Public Economics - - Publicly Provided Goods - - - General
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