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There are three people and two goods(private and public). Let G be the quantity of public good and xi denote i’s quantity of private good. Assume that the private good can be transformed into public good unit for unit. Suppose u1 = α√G + x1 u2 = β√G + x2 u3 = θ√G + x3 (a) Using the Samuelson optimality condition,... show more There are three people and two goods(private and public). Let G be the quantity of public good and xi denote i’s quantity of private good. Assume that the private good can be transformed into public good unit for unit. Suppose
u1 = α√G + x1 u2 = β√G + x2 u3 = θ√G + x3
(a) Using the Samuelson optimality condition, solve for the optimal output of the public good. (b) Suppose fixed tax shares are t1 = t2 = t3 = 1 3. What is the majority voting equilibrium output for the public good?
(c) Under what condition will the answers a and b give the same results?
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