DECENTRALIZATION OF PARETO OPTIMA IN ECONOMIES WITH PUBLIC PROJECTS, NONESSENTIAL PRIVATE GOODS AND CONVEX COSTS

In the theory of economies with public goods one usually considers the case in which private goods are essential, i.e., each agent receives a fixed minimum level of utility if he consumes no private goods, irre spective of the public goods consumed. This paper develops the second welfare theorem for economies with public projects and possibly inesse ntial private goods. As a corollary we also derive conditions under wh ich valuation equilibria exist.