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Public Provision of Private Goods

  • Epple, Dennis
  • Romano, Richard E

Government may provide a good that can, if legally permitted, be supplemented by private purchases. Policy is determined by majority rule. Under standard assumptions on preferences, a majority voting equilibrium exists. A regime of positive government provision with no restriction on private supplements is shown to be majority preferred to a regime of either only market provision or only government provision. Combined public and private expenditure on the good is higher under this dual-provision regime than under either of the alternatives. Under some preference configurations, the median-income voter is pivotal; under others, a voter with income below the median is pivotal. Copyright 1996 by University of Chicago Press.

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File URL: http://dx.doi.org/10.1086/262017
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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 104 (1996)
Issue (Month): 1 (February)
Pages: 57-84

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Handle: RePEc:ucp:jpolec:v:104:y:1996:i:1:p:57-84
Contact details of provider: Web page: http://www.journals.uchicago.edu/JPE/

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  1. Steinberg, Richard S, 1987. "Voluntary Donations and Public Expenditures in a Federal System," American Economic Review, American Economic Association, vol. 77(1), pages 24-36, March.
  2. Barzel, Yoram, 1973. "Private Schools and Public School Finance," Journal of Political Economy, University of Chicago Press, vol. 81(1), pages 174-86, Jan.-Feb..
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  8. Fries, Timothy L & Golding, Edward & Romano, Richard E, 1991. "Private Provision of Public Goods and the Failure of the Neutrality Property in Large Finite Economies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(1), pages 147-57, February.
  9. Besley, T. & Coate, S., 1989. "Public Provision Of Private Goods And The Redistribution Of Income," Papers 36, Princeton, Woodrow Wilson School - Discussion Paper.
  10. Stiglitz, J. E., 1974. "The demand for education in public and private school systems," Journal of Public Economics, Elsevier, vol. 3(4), pages 349-385, November.
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  13. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
  14. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
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