PUBLIC-SECTOR CROWDING OUT OF PRIVATE PROVISION OF PUBLIC-GOODS - THEINFLUENCE OF DIFFERENCES IN PRODUCTION COSTS

This article introduces differentials in the production costs in rile public and private sectors to models of public and private provision o f public goods. The result of this this exercise is to show that imper fect crowding out of private provision by public provision may occur e ven when the contributors are perfectly altruistic, Moreover, contrary to Andreoni's assertion that impure altruism is sufficient for less t han perfect crowding out the results of this analysis demonstrate that perfect crowding out is possible even when altruism is impure. Finall y the analysis shows that taxation of nondonors or taxation in excess of voluntary contributions is nor sufficient to ensure that the public provision increases the total supply of the public good.