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Public good provision and social loss under polarization

Author

Listed:
  • Ramón José Torregrosa Montaner

    (Universidad de Salamanca)

Abstract
This paper considers a population divided into two significantly-sized groups regarding the preferences its members have about a single public good. The public good equilibrium amount is that of the majority group in such a way that it is far from the Pareto-efficient one. This allows us to characterize a social loss function, which depends on the inter-group heterogeneity and the relative size of each group, parameters which also compound the degree of polarization. Our main conclusion is that, in general, higher levels of polarization do not imply higher social losses. This happens whenever the higher polarization is associated with higher inter-group heterogeneity, and the change in the amount of the public good in equilibrium implied is low enough.

Suggested Citation

  • Ramón José Torregrosa Montaner, 2017. "Public good provision and social loss under polarization," Working Papers. Serie AD 2017-03, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    • Handle: RePEc:ivi:wpasad:2017-03
    as

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    File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2017-03.pdf
    File Function: Fisrt version / Primera version, 2017
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    References listed on IDEAS

    as
    1. Esteban, Joan & Ray, Debraj, 1994. "On the Measurement of Polarization," Econometrica, Econometric Society, vol. 62(4), pages 819-851, July.
    2. John H. Evans, 2003. "Have Americans' Attitudes Become More Polarized?—An Update," Social Science Quarterly, Southwestern Social Science Association, vol. 84(1), pages 71-90, March.
    3. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65(2), pages 135-135.
    4. Howard R. Bowen, 1943. "The Interpretation of Voting in the Allocation of Economic Resources," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 58(1), pages 27-48.
    5. Randall Holcombe, 1989. "The median voter model in public choice theory," Public Choice, Springer, vol. 61(2), pages 115-125, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Public good; majority voting equilibrium; polarization;
    All these keywords.

    JEL classification:

    • D79 - Microeconomics - - Analysis of Collective Decision-Making - - - Other
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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