2010 slides public goods - 1 Public goods A pure public...

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1 Public goods ° A pure public good is a good in which you cannot exclude other consumers and also your consumption does not diminish the consumption of others. ° E.g. national defence, broadcast TV, a theorem in mathematics, knowledge. ° A local public good is one where your consumption does not diminish the consumption of others but oth- ers can be excluded. E.g. cable TV ° The issue is how much public goods will be provided privately and what is the socially e¢ cient level of production.
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1.1 Public good underprovision and the free riding problem ° Consider a public television station. Let the quality of the programs which the station provides be q . Let the cost of providing quality q be q . ° There are n identical viewers. A viewer has bene°t b ( q ) , b 0 > 0 ; b 00 < 0 if she views a program of quality q . ° Each viewer can make a voluntary contribution to the station. No viewer can be excluded from viewing the programs independent of their contribution. ° We want to °nd how much will each individual con- tribute to the station. ° Let viewer i contribute c i to the station.
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° Let the sum of the contributions of the other n ± 1 contributors be C ± i .
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