Public Provision of Indivisible Private Goods in Short Supply

Abstract

Public provision of private goods is usually modeled as the displacement of a market where people can buy as much or as little of a good as they please, with tax-financed provision by the government of equal and identical amounts of the good per person. But public provision is not always equal per person because some goods cannot be supplied equally or because the government does not choose to supply goods equally. There may be fewer organs available for transplant than there are people who need them. The best education and medical care are unavoidably rationed because teachers and doctors differ in skill or dedication. Total public expenditure may be insufficient to provide for everybody when there is a lower limit to useful expenditure per person.