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Question - Consider three residents A, B and C receiving benefits from installing 0-3 street lights as shown in the following table.
Resident
No. of Street Lights
0
1
2
3
A
80
120
140
B
60
90
155
C
200
220
Total Cost of Lights
240
360
i. Derive the net benefits table.
ii. Which resident has an incentive to lie?
iii. If she lies and states her benefits as double the actual net benefit how much the Clarke Tax?
iv. Show that she has no incentive to lie under Clarke Tax.
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