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Unformatted text preview: n not be paid by individual with small
Outcome is suboptimal A Ds B O C D2L
D1L Clubs and congestion
Clubs Clubs- organizations that form to provide excludable goods with Non rivalry
Non Congestion- utility declines with number of users B(N,X) Benefits depend on amenity size X and number of users
N. d B(N,X) /dN<0 d B(N,X) /dX>0 c(X) Cost increases with X
c(X) If costs are shared a member choice is
If MAX B(N,X)-c(X)/N which is equivalent to Max N* B(N,X)-c(X) Clubs:Optimal size (N and X)
Clubs:Optimal Social Optimality problem
NB( N .X ) − c( X )
X, N Optimal decision rules N...
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- Spring '11