Calculate optimal provision of public goods and financing mechanisms
Non-Rivalrous: One person's consumption doesn't reduce availability for others (e.g., national defense, lighthouse).
Non-Excludable: Difficult or impossible to exclude people from using the good once provided.
Free-Rider Problem: Individuals have incentive to benefit without paying, leading to under-provision.
Optimal Provision: Set where sum of individual marginal benefits equals marginal cost (Samuelson condition).
Lindahl Pricing: Theoretical solution where each person pays according to their marginal benefit.
Government Role: Often necessary to provide public goods due to market failure in private provision.