If the leader were to spend all of the tax revenue on providing private goods, what would the maximum value of the private goods be for each member of the winning coalition if we assume that they all receive the same amount?

4. (21 points) Suppose that a political leader raises $1 billion in tax revenue. Assume that the leader can supply public goods worth $2,000 to each individual in society if he spends all of this tax revenue on providing public goods. Assume also that the size of the winning coalition is 250,000. With all of this in mind, answer the following questions.

(a) If the leader were to spend all of the tax revenue on providing private goods, what would the maximum value of the private goods be for each member of the winning coalition if we assume that they all receive the same amount?

(b) Would the leader prefer to provide only public goods or only private goods in this situation? Why?

(c) Now suppose that the size of the winning coalition is 750,000. Keep- ing everything else the same, answer the following questions.

(d) If the leader were to spend all of the tax revenue on providing private goods, what would the maximum value of the private goods be for each member of the winning coalition if we assume that they all receive the same amount?

(e) Would the leader prefer to provide only public goods or only private goods in this new situation? Why?

(f) Based on the answers you have given and the description of selec- torate theory in this chapter, why is providing public goods a more e�cient way for leaders in democracies to stay in power?

(g) Based on the answers you have given and the description of selec- torate theory in this chapter, why is providing private goods a more e�cient way for leaders in dictatorships to stay in power?

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