Your example does not refute the assertion
Some public goods can be privately provisioned. Some cannot.
Incidentally I am wondering how long Georgia has had smoking and nonsmoking bars. Because [link|http://www.ajc.com/news/content/metro/0505/05smokingsigned.html|the non-smoking bars may not have a choice]. By law, if you have a bar at a restaurant that allows minors, you can't have smoking. You either have to give up the restaurant or give up smoking. Which is a very different economic proposition than deciding to go non-smoking because you hope to attract non-smokers.
BTW I note that this ban had strong public support. I also note that the article I linked to shows another incentive against a restaurant implementing a non-smoking policy on its own - which is the unpleasantness of having to confront smokers about their violating the policy. If there is a ban you can just say, "Sorry, it's the law." And you'll get far less argument than if you say, "Sorry, it's management policy." (Public confrontations with customers are, of course, generally bad for business...)
Cheers,
Ben
