A public durable good/bad theory in an overlapping generations economy
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Date
1988
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Virginia Polytechnic Institute and State University
Abstract
This research analyzes the long-lived public good/bad. The public good/bad is defined to ‘live long’ in the sense that the external effects of an action persist beyond the decision horizon of the actor. Thus, a very simple overlapping generations economy is modeled in which the agent lives for two periods while the public durable good/bad lasts indefinitely with deterioration/amelioration. Pareto optimality, the Lindahl equilibrium, and the theory of voluntary provision for this overlapping generations model are contrasted with those of the atemporal model.