Prestige clubs

Richard C. Cornes and Emilson C. D. Silva

Chapter 10 in Income Distribution, Economic Growth and Unemployment, 2025, pp 216-237 from Edward Elgar Publishing

Abstract: Numerous non-profit organizations that contribute to collective goods also provide prestige to their members. Some of these institutions function as prestige clubs, with prestige levels and member contributions working as club goods and membership fees, respectively. We investigate the endogenous formation of prestige clubs. We show that the competitive equilibrium features prestige clubs and that competing club managers engage in a futile race for institutional aggrandizement. The competition, however, yields coordination benefits produced by the internalization of positive and negative externalities within clubs. The competitive equilibrium is inefficient because clubs neglect external benefits and costs associated with their members’ contributions.

Keywords: Prestige; Clubs; Non-profit organizations; Charities; Public goods (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035342556
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