Street as a Stage: A Model of Dynamic Provision of Public Goods Under the Threat of Protest

Abstract

It has become increasingly common that the politically and economically weak citizens use protest as a channel through which they express their dissatisfaction with the policies engendered by the elites. This paper aims to provide a better understanding on this issue by using differential games to study whether protest could trigger some changes in public good investment under uncertainty. In this paper, we show that protest on its own is not sufficient for inducing the elites to invest more in public goods, a result that might come as a surprise to the citizens who might believe that, by protesting longer, the elites would be forced to increase their investment in public goods. The key to this result are the assumptions that the elites – the group with political power – choose policy to increase their income and to directly transfer resources from the rest of the society to themselves and the presences of uncertainty. Only when the level of public good is too low, which could trigger high dissatisfaction among the citizens and encourage them to take part in the revolution, would the elites choose to increase the investment in public goods.

Keywords: protest, public goods, uncertainty, differential games, class conflict

JEL Classification: C61, C73, H41