Adriana Alventosa, Gonzalo Olcina

Rich and Poor: On the Emergence of a Sanctioning Institution

Volume 177 () / Issue 1, pp. 56-80 (25)
Published 15.12.2020

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This paper analyzes the implementation of centralized sanctioning on free-riding behavior in societies where wealth heterogeneity leads to different individual incentives with respect to public goods. The decision on the implementation is made by a government representing a social class. We show that if the sanctioning institution can achieve contribution by the entire population, the government representing the poor will implement it more often. This will always be efficient. However, if the sanctioning institution only achieves contribution by part of the population, the government of a free-riding rich class can implement it more often. This may be inefficient.

Adriana Alventosa No current data available.

Gonzalo Olcina No current data available.