The Political Economy of Publicly Provided Private Goods

A large share of public funds is spent on private goods (education, health care, day care, etc.). This paper integrates two different approaches to the analysis of public provision of private goods. While normative public economies has established an efficiency case for such provision, the commonly helod political economy view has been that it is an economically inefficient phenomenon generated by the political process. The present paper argues that the central mechanism studied in the normative approach is equally relevant to voting models of decisions on public provision.