Voluntary Contributions to Multiple Public Goods in a Production Economy with Widespread Externalities
30 Pages Posted: 4 May 2007
Date Written: September 2007
Abstract
In a production economy, multiple public goods are produced by firms in competitive markets, and provided by the government together with contributions from consumers. There are widespread externalities: all consumers' consumption and contributions and all firms' production enter into utility functions. Public goods can be imperfectly substitutes or complements, and they can be local public goods or club goods. Zero bounds that require consumers to make nonnegative contributions complicate the differentiable approach. Applying the transversality theorem for smooth economies in a regular parameterization, we obtain the existence of equilibrium in such an economy, and generically equilibria are regular and locally unique.
Keywords: Voluntary contributions, multiple public goods, widespread externalities, generic regularity
JEL Classification: C62, D51, H41
Suggested Citation: Suggested Citation