Why Voters May Prefer Congested Public Clubs

Governmental facilities for such services as education, health, and transportation are often small, of poor quality, and overcrowded, even when the costs are spread among all taxpayers. We also find that governments may subsidize private facilities providing the same services, or may charge admission fees at public facilities. We explain these phenomena with a model which considers two types of people, rich and poor. A majority consisting of poor people may purposely build small and low quality facilities to discourage use by the rich, thereby lowering taxes. For the same reason, the poor may benefit from an admission fee at public clubs, or even from a subsidy to private clubs they do not use. *Earlier versions of this paper were presented at the 1991 annual meetings of the Public Choice Society, at the 1992 annual meetings of the American Economic Association, at Ohio State University, Carnegie Mellon University, University of Pittsburgh, University of California San Diego, and at the Government Institute for Economic Research in Helsinki, Finland. We are also grateful for comments by Miguel Gouveia, Richard Romano, and Suzanne Scotchmer. A traditional story of politics has a majority exploit the minority by building local public facilities that mostly benefit the majority. This may particularly apply when the costs of public facilities can be spread among all taxpayers, including those who do not use the public facilities. We observe, however, that governmental facilities are often smaU, of poor quality, and overcrowded. We also observe that many services provided by such facilities are also provided privately (consider public versus private schools and universities; public versus private medical care; public parks versus private golf courses; public mass transit versus private use of automobiles; and so on). We examine such phenomena by considering a public facility in a community consisting of two types of people: poor (assumed a majority) and rich. We suppose that a rich person is more averse to poor quality and to congestion than is a poor person. A rich person is therefore more willing to use a private facility. Since an increase in congestion or an increase in admission fees at the public facility will induce rich consumers to avoid the public facility, the majority may benefit from the change. For the same reason, the poor majority may favor a subsidy for private facilities they do not use. Club theory~ used here, provides tools to examine these issues. The spirit of our analysis appears in the literature on public and private provision of education (see Inman 1978, Sonstelie 1982, and Stiglitz 1974). In particular, Stiglitz examines how the quality of public education affects the number of persons who use it. Our analysis also shows how government can redistribute income: provide a public good of lower quality than preferred by the rich. A similar effect appears in Besley and Coate 1991.