When an organization or institution is fully funded by tax dollars it is, by its nature, wholly dependent on the government (be it federal, state, local, or a combination of the three) for its revenue. This is the government market.
If more than one organization or institution is wholly funded by the same government(s) (again, be it federal, state, local of a combination of the three), then those organizations or institutions compete, not for customers, but for tax dollars.
One example would be Medicaid and the Texas Department of Transportation (TxDOT). Even though they do not provide similar products or services, they compete. They do not compete for customers. They compete for tax dollars. Any dollar that goes to Medicaid – healthier populace – is a dollar that could have gone to TxDOT – safer roads. The opposite is true, too. Any dollar that goes to TxDOT – safer roads – is a dollar that could have gone to Medicaid – healthier populace.
In the government market there is one billfold or one purse. In the free market there are multiple billfolds and purses.
In the free market, if I purchase a Coke, my neighbor has no fewer funds to purchase a Pepsi – multiple billfolds or purses.
In the government market, if the Legislature decides to purchase more TxDOT than Medicaid, then there is less money available for Medicaid. One more dollar for TxDot means one less dollar for Medicaid – one billfold or one purse.
Another example of the one-billfold-or-one-purse concept is Public Education and Charter Schools. One more dollar for Public Education is one less dollar for Charter Schools. One more dollar for Charter Schools is one less dollar for Public Education.
Competition in the free market – multiple billfolds, multiple purses – is different than competition in the government market – one billfold or one purse. So, it is a mistake to use “competition” synonymously in the free and government markets.
By the very nature of the government market, Charter Schools do not compete with Public Education as Coke competes with Pepsi. Charter Schools take away from the available funds for Public Education.
* K-12 Public Education is defined as schools without charter schools or voucher-supported schools and is referred to as Public Education.