Government-Provided Private Goods Boost Public Revenue and Efficiency
Public provision of private goods can be efficient because the government can use information from individuals' private purchases to better fund public goods. This improves economic efficiency by combining revenue and expenditure decisions. The study shows that when individuals consume both public and private goods, having the government involved in providing private goods can lead to more effective revenue extraction for public goods. This model highlights the benefits of integrating revenue and expenditure considerations in public finance for optimal taxation.