This paper shows that public provision of private goods may be justified on pure efficiency grounds in an environment where individuals consume both public and private goods. The government's involvement in the provision of private goods provides it with information about individuals' private...

This paper addresses a fundamental, yet unresolved, question: is statistical discrimination a market failure? I consider the problem for a utilitarian social planner who operates in an environment with imperfectly observable human capital investments. It is found that the informational problem...