1. John Rudd Seattle Times July 11, 2008

2.  The Richmond Oval will be the speed skating venue for the upcoming Olympic winter games to be held in Vancouver, BC.  Sits on the banks of the Fraser River in Richmond, just outside of Vancouver.  Likely to become the signature facility due to it’s size and proximity to the airport  Roughly 361,000 sq. ft.  Seats 6,832 rabid fans of the Olympiad

6.  After the games are over, the facility will be used as a “sports and wellness” center  Divided into three sections that will house: ◦ Two Olympic sized ice rinks ◦ Hardwood area to for court sports like basketball ◦ Rubberized turf field for soccer, etc. ◦ A 320m walking track ◦ A 200m running track  Home to various community health programs, retail, fitness center, etc.

7. So how will this facility be financed?  Total cost is $178 million ◦ $60 million from VANOC (Olympic committee)  Funded by the province of BC and the Government of Canada ◦ $50 million from Casino funding (this is taken from a tax levied on casinos, I assume?) ◦ The rest from a “variety of other sources”, but no increases in property taxes or external borrowing.

8.  Project makes sense from an economic standpoint if the benefits exceed the costs.  For a public good, we are concerned with the sum of the public’s marginal benefit and the marginal cost of producing the arena: where there are n people who might benefit

9.  In this case, if the value of the benefits enjoyed by the public exceeds $178 million dollars, then go for it!  If we wanted to optimize, we could also derive a special case of the Samuelson conditions. The derivation is easier if we assume quasi-linear utility:

10. The problem becomes: Where: X is the private good Px = 1 G is the public good Pg = p M is income

11. Set up the Legrangian:

12.  A facility like this doesn’t have the qualities of a pure public good…it’s excludable and rival. Should it be financed publicly?  How would one go about figuring out the social benefit for Canada of something like the Olympics?  Those who will benefit in the long run are the citizens of Richmond and Vancouver who take advantage of the sports and wellness facility  These people are shouldering only a fraction of the costs since it is funded at the national level.