I study an environment in which individuals compete for status through the provision of public goods. People in the economy benefit from the public good and consume vicariously for the donor who receives a social prize. A familiar example of this phenomenon is the naming of universities and institutions after donors. The model has two stages: first, a status contest; second, a private provision of public goods (PPPG) game. In the first, the status position (prize) is publicly auctioned through contribution commitment proposals; in the second, each agent contributes to the public good at or beyond her commitment. I present conditions under which the public good is under-provided (as in a standard PPPG model) or over-provided (as in a private goods status model). With this on hand, I show that no equilibrium reaches the prize-inclusive Pareto frontier. A continuum parallel to the discrete model provides similar welfare implications, although individual motivations are different. Furthermore, I show that if the status prize is sufficiently large, an entity with the ability to redistribute wealth can lead the game to a partial optimal allocation (including private consumption and the public good, but excluding the prize) without further interference. Finally, I also show that lump sum government contributions crowd out private donations only partially.
|Commitee:||Holden, Richard, Sapra, Haresh, Simpser, Alberto|
|School:||The University of Chicago|
|School Location:||United States -- Illinois|
|Source:||DAI-A 70/12, Dissertation Abstracts International|
|Subjects:||Economics, Economic theory|
|Keywords:||Charity and status, Conspicuous consumption, Private provision, Private provision of public goods, Private provision of public goods and status, Public goods, Public goods and status, Status, Vicarious consumption|
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