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How do the distributive strategies that politicians choose affect the policy instruments that they devise? This paper examines the distributive politics of policy choice, with a substantive focus on social housing and infrastructure provision in Mexico. With nearly one billion people living in slums, housing has become one of the most pressing governance challenges across the developing world. I argue that politicians’ incentives and capacity affect the types of housing policies that they adopt. The theory emphasizes two as yet undertheorized factors that shape the incentives and resources that politicians face as they decide between policy options: 1) differences in the amenability of different policy instruments for partisan targeting and political manipulation, and 2) variations across incumbent parties’ organizational structure and political coalitions across time and space, even within a single city. These factors constrain politicians’ distributive strategies, and in particular the returns from individual and collective policy instruments (e.g., the construction of water networks in a shantytown compared with individual water tanks). To test the argument, the paper combines qualitative case studies, a small survey of program beneficiaries, and statistical and spatial analysis of housing and infrastructure provision in a large Mexican city, with a focus on the neighborhood level.