Public goods,growth, and welfare

This paper examines the possibility of immiserizing growth in an economy with a private and a pure public good. Our analysis shows that increases in resource endowments and/or technical improvements affecting the public good will be welfare-improving when the two commodities are normal and a Nash equilibrium exists. When substitution effects are strong, immiserizing growth is likely to characterize technical advances in the private good production.The authors gratefully acknowledge the helpful comments of two anonymous referees. Any remaining shortcomings are solely those of the authors.