ABSTRACT
This chapter first develops the distinction between public and private goods. Then it turns to the framework within which the economic theory of public expenditures has been developed and the limitations of this framework. In addition to the contrast between public and private goods a second element of the pure theory is that all public expenditures are assumed to be for final goods and services. The range or comprehensiveness of preferences relevant for the theory of public expenditures is an even more troublesome aspect of the purity of the theory. A partial equilibrium analysis of pure public goods probably should, insofar as possible, follow the conventional method developed for analysis of private goods. The foregoing discussion of the effects of numbers on the outcomes of the partial equilibrium approach attempts to differentiate the preference revelation difficulties of large numbers from the strategic elements of small numbers.
