Existence and Regularity of Equilibria in a General Equilibrium Model with Private Provision of a Public Good

Abstract

We prove existence and generic regularity of equilibria in a general equilibrium model of a completely decentralized pure public good economy. Competitive firms using private goods as inputs produce the public good, which is privately provided by households. Previous studies on private provision of public goods typically use one private good, one public good models in which the public good is produced through a constant returns to scale technology. As two distinguishing features of our model, we allow for the presence of several private goods and non-linear production technology. In that framework, we use an homotopy argument to prove existence of equilibria and we show that economies are generically regular.

Keywords: equilibrium existence, regularity, public goods

JEL Classification: D50, H41, H49