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MENTAL MODEL · M5989

Samuelson Condition

Samuelson Condition
BusinessHigh supportPublic Economics
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Updated 2026-08-05

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INTRODUCTION

English translation pending.

CORE DEFINITION

Paul Samuelson's condition for public goods, such as defense or street lighting, states that optimal supply is reached when the marginal benefits of all members of society, summed, equal the good's marginal cost. This differs from private goods, where each person's marginal benefit alone should equal the marginal cost. Evaluating shared team tools or infrastructure therefore means looking at total value across all users, and if the total exceeds the cost, collective funding is justified even when no individual would pay alone.

SCAFFOLDING EFFECT

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- Sum before split: add every user's marginal benefit before asking who pays for it. - Scale test: if the summed value clears the cost, fund it collectively and stop arguing about shares. - Free rider guard: expect under-supply if you leave provision to individual willingness to pay.

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A public good is non-rival, so one unit serves everyone at once and each person's marginal benefit from that unit must be added to the others'. Only when the vertical sum of individual marginal benefits meets the marginal cost is supply efficient; a private market stops where one person's benefit does not.

MINIMUM ACTION

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Samuelson_conditionZH · Explicit
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