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The Public Provision of Private Goods

The Public Provision of Private Goods. Private vs. public goods. Private goods: benefit just one entity (one person, one corporation) Collective goods: benefit every entity in a community (every firm in an industry, every person in the country). What private goods does the government provide?.

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The Public Provision of Private Goods

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  1. The Public Provision of Private Goods

  2. Private vs. public goods • Private goods: benefit just one entity (one person, one corporation) • Collective goods: benefit every entity in a community (every firm in an industry, every person in the country)

  3. What private goods does the government provide? • Contracts (Buying stuff) • Cell phones, computers, airplanes, missile systems • Tax breaks • Regulatory decisions for or against a business

  4. How does the government provide private goods? • Contracts • Departments and agencies contract with firms to purchase goods and services • Earmarks

  5. Earmarks • Congressional appropriations committees write the must-pass bills that keep the government running • 13 bills written by 13 Appropriations committee subcommittees • Bills decide how much will be spent by each agency (NASA, FBI, Homeland Security dept. overall, etc.) • Earmarks are when the appropriations subcommittee/committee writes into the bill that the agency it is funding must spend money for a very specific purpose

  6. How does the government provide private goods? • Contracts • Departments and agencies contract with firms to purchase goods and services • Earmarks • Regulatory agency decisions • Tax code

  7. Why might corporations have a lot of influence over the provision of private goods?

  8. Godwin and Seldon’s hypotheses • Lobbyists lobby when Probability of getting benefit x Benefit > Cost • Legislator will make effort to provide a good when (it is efficient to do so) Efficiency = Votes / Resources • Both will be more likely to act when winners know they won, and losers don’t know they lost

  9. Godwin and Seldon’s hypotheses • Corporations should spend a lot on lobbying if they rely on the government • Heavily regulated industry • Industry relies on government contracts • Lobby legislators who can produce private goods efficiently • Home state members • Members on relevant committees/subcomms

  10. Research design • 3 industries • 19 companies • Data from interviews

  11. Conclusions • PAC contributions go to home district, subcomm members • More communications between lobbyist for regulated industries and member staff • Corporations do most of their lobbying for private goods alone

  12. How could we continue to test this hypothesis? Opensecrets.org

  13. Potential for abuse?

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