A condominium community has landscaping that can be considered a pure public goo

Question

A condominium community has landscaping that can be considered a pure public good. Gardeners can be hired to maintain the landscaping at a rate of $350 per week. The community consists of five residents, with the marginal benefit for each gardener given in the table below.

1. What would be the tax shares for each resident under Lindahl pricing and how many gardeners would be hired under the Lindahl pricing tax shares?

Number of Gardener 1 2 3 4 Mike 375 275 225 175 Jan 225 150 75 0 Franklin 100 75 25 0 Susan 75 50 25 0 Megan 50 25 0 0

Explanation / Answer

In case of 1 Gardener, total marginal benefit of all 5 residents is 375+225+100+75+50 = 825

Thus, Mike's share of tax = (375/825)*350 = 0.45*350 = 157.5

Jan's share = (225/825)*350 = 95.45

Franklin's share = (100/825)*350 = 42.42

Susan's share = (75/825)*350 = 31.82

Megan's share = (50/825)*350 = 21.21

For more than 1 gardener, we can see that total social benefit is lower than 825. Thus, maximum benefit is derived by hiring 1 gardener and the tax shares are shown as above for each resident.

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