1. More on Lindahl equilibrium The analysis of public goods in this chapter exclusively used a model with only two individuals. The results are readily generalised to n persons – a generalisation...

1. More on Lindahl equilibrium The analysis of public goods in this chapter exclusively used a model with only two individuals. The results are readily generalised to
n
persons – a generalisation pursued in this problem.

a. With
n
persons in an economy, what is the condition for eficient production of a public good? Explain how the characteristics of the public good are relected in these conditions.

b. What is the Nash equilibrium in the provision of this public good to
n
persons? Explain why this equilibrium is ineficient Also explain why the under provision of this public good is more severe than in the two-person cases studied in the chapter.

c. How is the Lindahl solution generalised to
n
persons? Is the existence of a Lindahl equilibrium
guaranteed in this more complex model?