2. (Lee) Consider Lindahl's procedure to determine the quantity of public goods provision and the cost shares. This procedure presupposes that two consumers, A and B, sincerely reveals their demands for the public good. Suppose that B will still reveal his demand truthfully. If A tries to maximize his utility, what would happen? Explain using the graph.

2. (Lee) Consider Lindahl's procedure to determine the quantity of public goods provision and the cost shares. This procedure presupposes that two consumers, A and B, sincerely reveals their demands for the public good. Suppose that B will still reveal his demand truthfully. If A tries to maximize his utility, what would happen? Explain using the graph.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section: Chapter Questions

Problem 2PA

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