Question
Let N be a society of n individuals, where n is odd. These individuals plan to vote on the quantity of a good audience. If
Let N be a society of n individuals, where n is odd. These individuals plan to vote on the quantity of a good audience. If the current level of public good is G, then they vote to decide whether to increase or decrease the amount of the public good. An electoral equilibrium is a level of public good such that there is not a majority that prefers a different level. Each individual i is endowed with a level of wealth wi and has a quasi-linear utility function ui(G, xi) = ai ln(G) + xi where xi is the amount of private consumption, and is obliged to pay an equal share 1 not public good g. 1. Determine the unique electoral equilibrium of this public good game. 2. Determine a necessary and sufficient condition for the equilibrium quantity of the public good to coincide with the effective quantity. Suppose now that each individual i has the right to buy as much as he wishes of the public good from a price ft . 3. Determine the price vector that supports an efficient allocation of the public good.
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