How does the form that government spending takes affect resource allocation between public goods and private goods?

Government spending can take two forms: purchase of public and merit goods or transfer payments. If the
government buys public goods, it creates a reallocation of resources toward producing public goods and away from
private goods. If the government transfers income from taxpayers to other groups, this reallocation does not occur.
This is because the transfer recipients' purchases of private goods substitute for the taxpayers' purchases. We may,
however, see the transfer recipients buying different private goods than the taxpayers would have bought.