Privately provided public goods in a dynamic economy

Marsiliani, Laura; Renstroem, Thomas

Abstract

We show that when individuals can save (accumulate capital), they all eventually becomepublic-good contributors. In steady state, larger economies have more contributors. If thepublic good is normal, then its quantity increases in population size in the open-loopequilibrium, but not necessarily in the feedback equilibrium. If both private and public goodsare normal, then the open-loop equilibrium exhibits greater steady-state public provision thanthe feedback equilibrium. If private consumption is inferior the opposite is true. Interpretingindividuals as countries, our findings suggest that all countries over time will becomecontributors toward a global public good.

Citation

Marsiliani, L., & Renstroem, T. (2010). Privately provided public goods in a dynamic economy

• Working Paper Type: Working Paper
• Publication Date: Jan 1, 2010
• Deposit Date: Dec 7, 2012
• Publicly Available Date: Dec 7, 2012
• Series Title: Durham University Business School Economics Finance Accounting Working Papers
• Keywords: Private provision, Public goods, Dynamic, Intertemporal, differential game, JEL classifcation: C73 D91 E21 H40.
• Public URL: https://durham-repository.worktribe.com/output/1699649
• Publisher URL: http://www.dur.ac.uk/business/faculty/working-papers/