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Monopolistic Competition, Growth and Public Good Provision

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  • Paul Pecorino

Abstract

In the standard model, provision of a pure public good is increasing in group size if it is a normal good. I develop a model of public good provision in which private goods are supplied in a monopolistically competitive market. In this model, group size corresponds to population. I find that increases in population lead to reduced public good provision. The reason is quite simple: as population increases, the number of private goods available for consumption also increases. This raises the marginal utility of income and increases the opportunity cost of contributing to the public good. Copyright © The Author(s). Journal compilation © Royal Economic Society 2009.

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  • Paul Pecorino, 2009. "Monopolistic Competition, Growth and Public Good Provision," Economic Journal, Royal Economic Society, vol. 119(534), pages 298-307, January.
    • Handle: RePEc:ecj:econjl:v:119:y:2009:i:534:p:298-307
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    References listed on IDEAS

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    1. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
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    1. Pecorino, Paul, 2010. "By-product lobbying with rival public goods," European Journal of Political Economy, Elsevier, vol. 26(1), pages 114-124, March.
    2. Masatoshi Yoshida & Stephen J. Turnbull & Mitsuru Ota, 2023. "Environmental offsets and production externalities under monopolistic competition," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(2), pages 305-325, April.
    3. Masatoshi Yoshida & Stephen J. Turnbull, 2021. "Voluntary provision of environmental offsets under monopolistic competition," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(4), pages 965-994, August.
    4. Bag, Parimal Kanti & Mondal, Debasis, 2014. "Group size paradox and public goods," Economics Letters, Elsevier, vol. 125(2), pages 215-218.
    5. Rhydian James & Peter Midmore & Dennis Thomas, 2012. "Public Sector Size and Peripherality," Spatial Economic Analysis, Taylor & Francis Journals, vol. 7(4), pages 447-460, December.
    6. Debasis Mondal & Manash Ranjan Gupta, 2022. "Private provision of public goods: a general equilibrium analysis," Indian Economic Review, Springer, vol. 57(2), pages 285-300, December.
    7. Rajit Biswas, 2015. "Tariffs that may fail to protect: A model of trade and public goods," Economics Bulletin, AccessEcon, vol. 35(1), pages 361-370.

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