Status-seeking behavior leads to over-provision of public goods
The article explores how incentives affect the provision of public goods. It shows that when people can benefit personally or gain status from contributing, they are more likely to do so. However, this can lead to too much of the public good being provided, causing congestion. On the other hand, when consuming the public good is costly, free-riding is reduced, leading to more efficient provision. Overall, efforts to maximize welfare often involve redistributing benefits from consumers to producers.