Repeated Interaction, Redistribution, and the Public Provision of Private Goods

University of Munich Working Paper No. 99-04

20 Pages Posted: 24 Apr 1999

See all articles by Claudio Thum

Claudio Thum

University of Munich, CES; CESifo (Center for Economic Studies and Ifo Institute)

Marcel P. Thum

Dresden University of Technology - Faculty of Economics and Business Management; CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute; Institute for Corruption Studies

Date Written: February 1, 1999

Abstract

The public provision of private goods can be used as a self-selection device to identify income groups. This allows cost efficient redistribution between income groups even if the government cannot observe the individuals' incomes. This paper examines how redistribution through public provision of private goods extends to the case of repeated interaction between government and transfer recipients. By implementing the self-selection device, the government gains information about the households which facilitates redistributive transactions in the future. This, in turn, may trigger strategic behavior of households and weaken the self-selection mechanism.

JEL Classification: H42, H2

Suggested Citation

Thum, Claudio and Thum, Marcel, Repeated Interaction, Redistribution, and the Public Provision of Private Goods (February 1, 1999). University of Munich Working Paper No. 99-04, Available at SSRN: https://ssrn.com/abstract=160908 or http://dx.doi.org/10.2139/ssrn.160908

Claudio Thum (Contact Author)

University of Munich, CES ( email )

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Marcel Thum

Dresden University of Technology - Faculty of Economics and Business Management ( email )

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CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

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