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Image Concerns and the Political Economy of Publicly Provided Private Goods

Author

Listed:
  • Tobias König
  • Tobias Lausen
  • Andreas Wagener
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 coalitions that can prevail in a political equilibrium.

Suggested Citation

  • Tobias König & Tobias Lausen & Andreas Wagener, 2017. "Image Concerns and the Political Economy of Publicly Provided Private Goods," CESifo Working Paper Series 6304, CESifo.
    • Handle: RePEc:ces:ceswps:_6304
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    References listed on IDEAS

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    Cited by:

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    2. Dotti, Valerio, 2020. "Income inequality, size of government, and tax progressivity: A positive theory," European Economic Review, Elsevier, vol. 121(C).
    3. Ferrari, Luca, 2018. "Social limits to redistribution and conspicuous norms," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 12, pages 1-21.
    4. Windsteiger, Lisa, 2022. "The redistributive consequences of segregation and misperceptions," European Economic Review, Elsevier, vol. 144(C).

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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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