Show that the majority voting outcome is pareto-ecient

Reference no: EM131204522

Consider a two-good economy (one private good and one public good) and a large number H of individuals with single-peaked preferences for the public good. Suppose that the provision of the public good is decided by majority voting, and that it costs one unit of private good to produce one unit of public good. The cost is equally divided among the H individuals. Show that the majority voting outcome is Pareto-ecient if the median marginal rate of substitution is equal to the average marginal rate of substitution.

Reference no: EM131204522

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