Rent Seeking and the Provision of Public Goods

Mark Gradstein

Economic Journal, 1993, vol. 103, issue 420, 1236-43

Abstract: In this short paper I adopt the public choice school paradigm of modeling a government in order to compare its performance with that of the market in the standard model of the provision of public goods. Private provision is represented by the Cournot-Nash equilibrium in individual contributions. Public provision incorporates rent seeking, whereby some of the aspects of the allocation are determined indirectly by influence activities of the interested parties. Thus, both allocation procedures yield inefficiency, and the question is which procedure results in a greater amount of inefficiency: private provision with its free riding incentives, or public provision with its rent seeking incentives. The results indicate that public provision may well be preferred to private provision of public goods. Thus, superiority of private provision is not guaranteed even in the case of a non-benevolent government. Copyright 1993 by Royal Economic Society.

Date: 1993
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