PROVISION OF PUBLIC-SERVICES WHEN PRIVATE ALTERNATIVES EXIST

This paper studies the provision of, and demand for, a public service when a private alternative is available. We link the concept of adequa te resources for a public service to the availability of a private alt ernative, rather than to the public service's ability to meet total de mand. We also consider a situation where only part of the population h as access to the state service (as is, for instance, the case with sub sidised housing) and formalize the concept of the poverty trap, which occurs when access to the public service is of an all or nothing type.