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Image concerns and the political economy of publicly provided private goods

Tobias König, Tobias Lausen and Andreas Wagener

No SP II 2016-214, Discussion Papers, Research Unit: Market Behavior from WZB Berlin Social Science Center

Abstract: Governments often provide their citizens with goods and services that are also supplied in markets: education, housing, nutritional assistance, etc. We analyze the political economy of the public provision of private goods when individuals care about their social image. We show that image concerns motivate richer individuals to vote for the public provision of goods they themselves buy in markets, the reason being that a higher provision level attracts more individuals to the public system, enhancing the social exclusivity of market purchases. In effect, majority voting may lead to a public provision that only a minority of citizens use. Users in the public system may enjoy better provision than users in the private system. We characterize the coalition structures across voters that can prevail in a political equilibrium.

Keywords: [Dual provision] In-kind provision; Status preferences; Majority voting (search for similar items in EconPapers)
JEL-codes: H42 D72 D63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm and nep-pol
Date: 2016
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Related works:
Working Paper: Image Concerns and the Political Economy of Publicly Provided Private Goods (2017) Downloads
Working Paper: Image Concerns and the Political Economy of Publicly Provided Private Goods (2017) Downloads
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