Scandinavian Working Papers in Economics

Working Paper Series,
Uppsala University, Department of Economics

No 1998:14: The Political Economy of Publicly Provided Private Goods

Sören Blomquist () and Vidar Christiansen ()
Additional contact information
Sören Blomquist: Department of Economics, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Vidar Christiansen: Department of Economics, Postal: Department of Economics, Oslo University, PO Box 1095 Blinder, 0317 Oslo, Norway, Sweden

Abstract: 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 economics has established an efficiency case for such provision, the commonly held 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. It is shown that under plausible information constraints economically efficient public provision of private goods will be part of politically rational decisions emerging from a median voter process or a representative democracy of political parties.

Keywords: political economy; public provision; private goods; in-kind transfers

JEL-codes: D72; H21; H42; I38

30 pages, June 15, 1998

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