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Cost share equilibria: A Lindahlian approach

1989; Elsevier BV; Volume: 47; Issue: 2 Linguagem: Inglês

10.1016/0022-0531(89)90019-7

1095-7235

Andreu Mas‐Colell, Joaquim Silvestre,

Economic Theory and Policy

We offer a new formalization of Lindahl's equilibrium notion for public goods which yields an endogenous theory of profit distribution in line with the benefit approach to taxation. Increasing returns in the production of public goods are not a priori excluded. Our equilibrium notion coincides with Kaneko's "Ratio Equilibrium" for economies with only one public good. By reinterpreting the commodity space, the equilibrium concept can be applied to economies with purely private goods or with externalities. In the pure private good case, our concept singles out allocations that are efficient and where individual net payments agree with average cost.