In Section B, we show mathematically that the optimal subsidy will involve the government paying for half
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In Section B, we show mathematically that the optimal subsidy will involve the government paying for half the cost of the fireworks if you and I have the same preferences. By thinking about the size of the externality (or how much of the total benefit is not taken into account by an individual consumer), does this make intuitive sense?
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Related Book For
Microeconomics An Intuitive Approach With Calculus
ISBN: 9781337335652,9781337027632
2nd Edition
Authors: Thomas Nechyba
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