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

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  • Jana Friedrichsen
  • Tobias König
  • Tobias Lausen

Abstract

We analyze 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 characterize the coalitions that can prevail in a political equilibrium.

Suggested Citation

  • Jana Friedrichsen & Tobias König & Tobias Lausen, 2019. "Social Status Concerns and the Political Economy of Publicly Provided Private Goods," Discussion Papers of DIW Berlin 1824, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1824
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    More about this item

    Keywords

    In-kind provision; Status preferences; Majority voting;
    All these keywords.

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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