Monopolistic Competition, Growth, and Public Good Provision

U of Alabama Economics, Finance and Legal Studies Working Paper No. 06-10-02

20 Pages Posted: 11 Jan 2007

See all articles by Paul Pecorino

Paul Pecorino

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

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Date Written: October 2006

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 context, increases in the size of the group are increases in the population of a society. 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.

Keywords: Public Goods, Monopolistic Competition, Group Size, Growth

JEL Classification: H41, D7

Suggested Citation

Pecorino, Paul, Monopolistic Competition, Growth, and Public Good Provision (October 2006). U of Alabama Economics, Finance and Legal Studies Working Paper No. 06-10-02, Available at SSRN: https://ssrn.com/abstract=956183 or http://dx.doi.org/10.2139/ssrn.956183

Paul Pecorino (Contact Author)

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

P.O. Box 870244
Tuscaloosa, AL 35487
United States
205-348-0379 (Phone)
205-348-0590 (Fax)

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