Existence, Uniqueness and Some Comparative Statics for Ratio and Lindahl Equilibria: New Wine in Old Bottles

Abstract

We present a rigorous, yet elementary, demonstration of the existence of a unique Lindahl equilibrium under the assumptions that characterize the standard n-player public good model. Indeed, our approach, which exploits the aggregative structure of the public good model, lends itself to a transparent geometric representation. Moreover, it can handle the more general concept of the cost-share or ratio equilibrium. Finally, we indicate how it may be exploited to facilitate comparative static analysis of Lindahl and cost share equilibria.

Keywords: public goods, Lindahl equilibrium, ratio equilibrium

JEL Classification: H41