Consider two consumers with preferences Where Ti is the tax levied in jurisdiction i and Gi is public good provision. Assume a2 > a1. The level of public good in each region is decided by majority voting of its residents. If there are two residents, assume that the supply is the average of the preferred quantities of the residents.
Consider two consumers with preferences Where Ti is the tax levied in jurisdiction i and Gi is public good provision. Assume a2 > a1. The level of public good in each region is decided by majority voting of its residents. If there are two residents, assume that the supply is the average of the preferred quantities of the residents.
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Consider two consumers with preferences
Where Ti is the tax levied in jurisdiction i and Gi is public good provision. Assume a2 > a1. The level of public good in each region is decided by majority voting of its residents. If there are two residents, assume that the supply is the average of the preferred quantities of the residents.
a. Show that the preferred quantity of public good for consumer h if they locate in jurisdiction i is given by Gh = niah; where ni is the jurisdiction population.
b. Assuming consumers correctly predict the consequences of location choice, show that there is no equilibrium if
c. Show that there is an equilibrium if consumers take provision levels as given.
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