Diskussionsbeiträge: Serie II, Sonderforschungsbereich 178 "Internationalisierung der Wirtschaft", Universität Konstanz 219
A global analysis of the welfare effect of changes in tariffs is undertaken in multihousehold economy with any finite number of private and pure (nonexclusive and nonrivalrous) public goods. The sensitivity of the results to various methods of financing the production of public goods is examined in some detail. The concept of the extent of underproduction of public goods in more or less populous economies is made precise and then applied to the analysis of the welfare effects of tariff changes. A globally valid necessary and a sufficient condition for welfare improving tariff changes under different methods of financing are derived and interpreted.