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Imagine there are a couple of proposals related to building baseball stadia in Pennsylvania. The state will pay for the entire arena and there are 3 equal areas in terms of taxes and political power. The proposals are to build the stadia in Philadelphia and Pittsburgh. The benefits to the regions are in the following table.
Regions
Benefit from Philadelphia stadium
Benefit from Pittsburgh stadium
Philadelphia
15
-12
Pittsburgh
-5
Central PA
a) Will either proposal pass if just decided on its own? Explain.
b) Will a proposal combining both arenas pass? Explain.
c) Does the combining of the two plans lead to an increase in social well-being? Explain
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