Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/149868
Authors: 
König, Tobias
Lausen, Tobias
Wagener, Andreas
Year of Publication: 
2016
Series/Report no.: 
WZB Discussion Paper SP II 2016-214
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.
Subjects: 
[Dual provision] In-kind provision
Status preferences
Majority voting
JEL: 
H42
D72
D63
Document Type: 
Working Paper

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