Public Provision of Private Goods

Abstract

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.