Advertisement

Public Choice

, Volume 47, Issue 1, pp 267–303 | Cite as

A taxonomy of public provision

  • Russell D. Roberts
Article

Conclusion

The basic result of this paper is that when government provides either public goods, private goods with externalities, or transfers motivated by altruism, public provision is large enough to completely crowd out private provision. In contrast, when government provides private goods, public provision redistributes resources without completely crowding out private provision. Thus the coexistence of public and private provision indicates a private good; public provision that completely crowds out private provision indicates a public good or the presence of externalities.

The model argues that national defense, aid to the poor, aid to the poor elderly, and municipal activities such as street-cleaning are publicly provided for efficiency. Public fire and police protection are also consistent with the efficiency argument. Goods and transfers which are publicly provided for purely redistributive reasons are: aid to farmers, social security to the middle and upper class, postal service, and education.

The model allows public provision to transfer resources to indirect demanders. Even when public activity is motivated by efficiency considerations, it structures provision to redistribute some of the gains. Perhaps direct demanders receive their preferred level of public goods and altruistic transfers without indirect demanders receiving rents. This leaves unexplained the excess applications to become postal workers and school teachers, for example, and the intense lobbying efforts on the part of defense contractors, welfare recipients, the Gray Panthers, and the local teachers union.

As usual, many simplifying assumptions were made in this paper in order to get results. For example, treating the political process as a sequential process ignores interactions among different types of goods. In addition, I assumed fixed endowments, that individuals interact in a Cournot-Nash fashion, and that no citizens are indifferent to the public good or dislike it. Relaxing these assumptions may weaken the predictions or yield additional implications.

Keywords

Public Good Private Good Welfare Recipient Public Provision Private Provision 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Abrams, B.A. and Schmitz, M.D. (1978) The ‘Crowding Out’ Effect of Governmental Transfers on Private Charitable Contributions. Public Choice, 33: 28–40.Google Scholar
  2. Barro, R. (1974) Are Government Bonds Net Wealth? Journal of Political Economy, 82: 1095–1117.Google Scholar
  3. (1978) The Impact of Social Security on Private Savings—Evidence from the U.S. Times Series. Washington D.C.: American Enterprise Institute.Google Scholar
  4. Barzel, Y. (1973) Private Schools and Public School Finance. Journal of Political Economy, 81: 174–186.Google Scholar
  5. Baumol, W.J. (1983) Toward a Theory of Public Enterprise. Working Paper, New York University.Google Scholar
  6. Becker, G.S. (1978) A Positive Theory of the Redistribution of Income. University of Chicago, Center for the Study of the Economy and the State, Working Paper No. 006.Google Scholar
  7. (1983) A Theory of Competition Among Pressure Groups for Political Influence. Quarterly Journal of Economics, 98: 371–400.Google Scholar
  8. Becker, G.S. and Tomes, N. (1976) Child Endowments and the Quantity and Quality of Children. Journal of Political Economy, 84: S143–162.Google Scholar
  9. Bergstrom, T., Blume, L., and Varian, H. (1983) On the Private Provision of Public Goods. Working Paper, University of Michigan.Google Scholar
  10. Borcherding, T.E., (ed.) (1977) Budgets and Bureaucrats: The Sources of Government Growth. Durham: Duke University Press.Google Scholar
  11. (1977) One Hundred Years of Public Spending, 1870–1970. Chapter 2, in T. Borcherding, (ed.), Budgets and Bureaucrats: The Sources of Government Growth, Durham: Duke University Press.Google Scholar
  12. , Bush, W.C. and Spann, R.M. (1977) The Effects on Public Spending of the Divisibility of Public Outputs in Consumption, Bureaucratic Power, and the Size of the Tax-Sharing Group. Chapter 12, in T. Borcherding (ed.), Budgets and Bureaucrats: The Sources of Government Growth, Durham: Duke University Press.Google Scholar
  13. Buchanan, J. (1970) Notes for an Economic Theory of Socialism, Public Choice, 8: 29–44.Google Scholar
  14. Franklin, B. (1961) The Autobiography and Other Writings. New York: New American Library.Google Scholar
  15. Hanushek, E. (1981) Throwing Money at Schools. Journal of Policy Analysis and Management, 1: 19–41.Google Scholar
  16. Hughes, J.R.T. (1976) Social Control in the Colonial Economy. Charlottesville: University of Virginia Press.Google Scholar
  17. Katz, M. (1983) Poverty and Policy in American History. New York: Academic Press.Google Scholar
  18. Legler, J.B. (1976) Regional Distribution of Federal Receipts and Expenditures in the Nineteenth Century: A Quantitative Study. Ph.D. Thesis, Purdue University.Google Scholar
  19. MacDonald, M. (1977) Food, Stamps, and Income Maintenance. New York: Academic Press.Google Scholar
  20. Meltzer, A. and Richard, S. (1981) A Rational Theory of the Size of Government. Journal of Political Economy, 89: 914–927.Google Scholar
  21. Niskanen, W.A. (1975) Bureaucrats and Politicians. Journal of Law and Economics, 18: 617–643.Google Scholar
  22. Peltzman, S. (1973) The Effect of Government Subsidies In Kind on Private Expenditures: The Case of Higher Education. Journal of Political Economy, 81: 1–27.Google Scholar
  23. (1976) Towards a General Theory of Regulation. Journal of Law and Economics, 19: 211–240.Google Scholar
  24. Roberts, R.D. (1983) Social Security as Redistribution. Working Paper, University of Rochester.Google Scholar
  25. Roberts, R.D. (1984a) Altruism, Efficiency and the Redistribution of Income. Working Paper, University of Rochester.Google Scholar
  26. (1984b) A Positive Model of Private Charity and Public Transfers. Journal of Political Economy, 92: 136–148.Google Scholar
  27. (1985) Recipient Preferences and the Design of Transfer Programs. Journal of Law and Economics, 28: 27–54.Google Scholar
  28. Romer, T. and Rosenthal, H. (1979) The Elusive Median Voter. Journal of Public Economics, 12: 143–170.Google Scholar
  29. Schwartz, R.A. (1966) Private Philanthropic Contributions—An Economic Analysis. Ph.D. thesis, Columbia University.Google Scholar
  30. Spann, R.M. (1974) Collective Consumption of Private Goods. Public Choice, 20: 63–81.Google Scholar
  31. Stigler, G. (1971) The Theory of Economic Regulation. Bell Journal of Economics and Management Science, 2: 3–21.Google Scholar
  32. and Friedland, C. (1962) What Can Regulators Regulate? The Case of Electricity. Journal of Law and Economics, 5: 1–16.Google Scholar
  33. Tresch, R. (1981) Public Finance: A Normative Theory. Plano, Texas: Business Publications Inc.Google Scholar
  34. USA Today (1984) May 14.Google Scholar
  35. Warr, P. (1982) Pareto Optimal Redistribution and Private Charity. Journal of Public Economics, 19: 131–138.Google Scholar
  36. (1983) The Private Provision of Public Goods is Independent of the Distribution of Income. Economics Letters, 13: 207–211.Google Scholar
  37. Weingast, B., Shepsle, K., and Johnsen, C. (1981) The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics. Journal of Political Economy, 89: 642–664.Google Scholar
  38. Weisbrod, B.A. (1975) Toward a Theory of the Voluntary Non-Profit Sector in a Three-Sector Economy. In E. Phelps, (ed.), Altruism, Morality, and Economic Theory. New York: Russell Sage Foundation.Google Scholar

Copyright information

© Martinus Nijhoff Publishers 1985

Authors and Affiliations

  • Russell D. Roberts

There are no affiliations available

Personalised recommendations