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Consider an economy with two types of goods, a public good G and a private good z. There are two people in the economy whose

Consider an economy with two types of goods, a public good G and a private good z. There are two people in the economy whose preferences are given by the utility functions: Ui(zi , G) = zi + i ln(G), i = 1, 2 and 1 6= 2. Each individual has an initial endowment mi , and the marginal cost of a unit of G is 1, i.e., the total cost is G dollars for G units. Find the Lindahl prices. Interpret what you find briefly.

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