what is lindahl equilibrium ? explain with the help of diagram.
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A circumstance where the amount produced and consumed of a public good is adjusted to the price that individuals are able and willing to pay for that specific good. Substantial adjustments need to be made between the supply, demand and cost of the public good before the point where a balance or equilibrium is reached where all these elements are in agreement. The end result is that the public good or public need is met by balancing the price to one that private individuals can pay.
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Lindahl equilibrium is a state of equilibrium in a quasi-market for a pure public good. Like a competitive market equilibrium, the supply and demand for the good are balanced, in addition to the cost and revenue to produce the good. Lindahl equilibrium depends on the possibility of implementing an effective Lindahl tax, first proposed by the Swedish economist Erik Lindahl.
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