The Samuelson Public Goods Model, proposed by economist Paul Samuelson in 1954, provides a framework for understanding the provision of public goods—goods that are non-excludable and non-rivalrous. This means that one individual's consumption of a public good does not reduce its availability to others, and no one can be effectively excluded from using it. The model emphasizes that the optimal provision of public goods occurs when the sum of individual marginal benefits equals the marginal cost of providing the good. Mathematically, this can be expressed as:
where is the marginal benefit of individual and is the marginal cost of providing the public good. Samuelson's model highlights the challenges of financing public goods, as private markets often underprovide them due to the free-rider problem, where individuals benefit without contributing to costs. Thus, government intervention is often necessary to ensure efficient provision and allocation of public goods.
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