Calculate the loss from enforcing uniformity of provision

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Reference no: EM131204117

Two jurisdictions have preferences described by

where Gj is the quantity of the local publc good in jurisdction j and yj > 0 is a parameter.

a. What is the optimal quantity of public good for the two jurisdictions?

b. If the public good is centrally provided so that G^A= G^B, find the quantity that maximizes U^A + U^B.

c. Calculate the loss from enforcing uniformity of provision.

Reference no: EM131204117

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