Monopolistic Competition, Growth and Public Good Provision

10 Pages Posted: 10 Dec 2008

See all articles by Paul Pecorino

Paul Pecorino

University of Alabama - Department of Economics, Finance and Legal Studies

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Abstract

In the standard model, provision of a pure public good is increasing in group size if it is a normal good. I develop a model of public good provision in which private goods are supplied in a monopolistically competitive market. In this model, group size corresponds to population. I find that increases in population lead to reduced public good provision. The reason is quite simple: as population increases, the number of private goods available for consumption also increases. This raises the marginal utility of income and increases the opportunity cost of contributing to the public good.

Suggested Citation

Pecorino, Paul, Monopolistic Competition, Growth and Public Good Provision. Economic Journal, Vol. 119, No. 534, pp. 298-307, January 2009, Available at SSRN: https://ssrn.com/abstract=1313925 or http://dx.doi.org/10.1111/j.1468-0297.2008.02214.x

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University of Alabama - Department of Economics, Finance and Legal Studies ( email )

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