Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

 
Bowen Model: 
 
H.R. Bowen has presented a simple model of benefit 
principle in his book ‗Toward Social Economy‘ published in 1948. 
Musgrave favours Bowen‘s model because it is more realistic as it 
assumes increasing cost conditions in the provision of social goods. 
Further, Bowen measured costs as opportunity costs. According to 
him the opportunity cost of a given unit of a social good is the 
amount of a social good foregone by the tax-payer. 
The model assumes one social good and two individual tax-
payers A and B. 

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Figure 15.2: Bowen‟s Model 
In the above figure curves D
a
and D
b
represents A‘s and B‘s 
demand for the social good respectively. Curve D represents the 
total demand for the social good by summing D
a 
and D
b
. S curve 
stands for the supply curve of the social good which is upward 
sloping due to the increasing costs function. If the costs are 
measured as opportunity costs in terms of the amount of private 
good foregone, the S curve to represent the aggregate demand for 
private goods as well. 
Equilibrium is attaining at point P with the intersection of D 
and S curves where equilibrium output is OQ amount of social 
goods, while QX is that of the private good. The total cost in 
providing OQ amount of social good is OQPT. 
The tax share of A and B for the provision of OQ amount of 
social good collectively enjoyed by both individual is determined in 
accordance with their respective demand curves D
a
and D
b
. Thus, 
we have OQRS as A‘s share and OQZM as B‘s share. Evidently, 
ORRS + OQZM = OQPT.