Image concerns and the political economy of publicly provided private goods

Tobias König, Tobias Lausen and Andreas Wagener

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: D63 D72 H42 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cdm and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Image Concerns and the Political Economy of Publicly Provided Private Goods (2017)
Working Paper: Image Concerns and the Political Economy of Publicly Provided Private Goods (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbmbh:spii2016214

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