Social Status Concerns and the Political Economy of Publicly Provided Private Goods

Housing markets and structural policies in OECD countries

Jana Friedrichsen, Tobias König and Tobias Lausen

The Economic Journal, 2021, vol. 131, issue 633, 220-246

Abstract: We analyse the political economy of the public provision of private goods when individuals care about their social status. Status concerns motivate richer individuals to vote for the public provision of goods they themselves buy in markets: a higher provision level attracts more individuals to the public sector, enhancing the social exclusivity of market purchases. Majority voting may lead to a public provision that only a minority of citizens use. Users in the public sector may enjoy better provision than users in the private system. We characterise the coalitions that can prevail in a political equilibrium.

Date: 2021
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Journal Article: Social Status Concerns and the Political Economy of Publicly Provided Private Goods (2021)
Working Paper: Social Status Concerns and the Political Economy of Publicly Provided Private Goods (2019)
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