Henry George Theorem in a Dynamic Framework without Accumulation of Public Goods

The Henry George Theorem, which is originally established in a static model, asserts that the cost of public good provision should be equal to the total revenue of the land rent to achieve the optimal size of population of each region. This paper examines this theorem in a dynamic framework of overlapping generations model, assuming that the government maximizes the sum of the utilities of the generations of finite periods. We show that the optimal path converges to the stationary state, however, it does not stay on it. We derive that the theorem is valid only in the stationary state, and no longer valid along the optimal path.