A Planning Approach to the Public Good Problem
The theory of planning should give new insight into the classical problem of how to achieve an optimal provision of public goods. The point is exhibited by a diagrammatic study of the simple model in which there are just two consumers and two commodities, one private, one public. Besides the procedure proposed by E. Lindahl, two others are discussed; the first uses tax indicators, the second quantity indicators. Consideration is given to three requirements: convergence to an optimum, equitable treatment of the two consumers, incentives for correct revelation of preferences.
KeywordsDemand Curve Marginal Rate Private Consumption Planning Approach Private Good
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