Static and dynamic (in)efficiency in public goods provision

- We develop a theoretical model with heterogeneous agents that differ in income.
- We focus on two alternative public choice mechanisms.
- We show that static inefficiency depends on the public choice mechanism.
- We show that it depends also on the income elasticity of the public good.
- We show that a trade-off may be at work between static and dynamic (in)efficiency.

We analyze, with a methodological focus, in which cases and under which hypotheses, the dispersion of the distribution of individual demands affects the provision of public goods. We derive implications in terms of static and dynamic (in)efficiency.