Darkness said:
I'd try a carrot in addition to a stick.
I.e., I'd go out of my way to reward good behavior. Including with tangible benefits (e.g., lower prices than the arrogant guy gets, etc.).
Absolutely. Let the NPCs reward politeness and kindness with the same, and not waste their time on rude jerks (not even to tell them to buzz off). Important NPCs make time to speak with the polite characters, while the arrogant ones have to cool their heels outside and never even get to see them.
It's a nice, realistic, non-confrontational way of handling it, and sometimes it actually works. And if it doesn't, well, at least you're keeping that PC from interacting with the NPCs, and that's as close to a victory as you were likely to get.
Another thing I'd suggest trying if you're just completely sick of an arrogant PC is ridicule. He starts copping an attitude with an NPC for no reason? Then start having the other NPCs poke fun at him. Maybe some of them do it in a friendly way, an "Oh, man, I just can't get enough of this guy. Next time we throw a party, someone needs to invite him. We won't need to hire jesters" kind of thing. You know, just skirting the edge of saying "This guy is a huge buffoon who thinks he's cool, let's give him some more rope and see what kind of knot he ties to hang himself with." Maybe other NPCs just laugh at him. Maybe some resort to childish taunts (repeating everything the PC says in their best OH YOU'RE SO SCAAAAAARY voice).
And then keep it up out-of-character if they don't take a hint. Make side jokes about how everyone in the game world thinks that PC is a self-absorbed doofus who doesn't even realize when he's sticking his foot in his mouth.
I tell you, nothing wounds an ego-driven character as much as being made into a running joke. When they hear all their best Clint Eastwood one-liners coming back to them as punchlines to funny anecdotes about how their PC is universally considered a ridiculous jackass, most of them start to watch their tongues...if only to give you less material to work with.
There are some other things to try, too. Making most of the "ordinary" NPCs the party interacts with be relatively good-natured, honest people who are inclined to be helpful and forthcoming about the things that are important to them as well as things that they have no vested interest in being cagey or domineering about, for example. (I sometimes think the worst Arrogant PC Syndromes are the result of playing in games where every NPC was a closed-mouthed bastard who was out to screw over the PCs. DON'T BE THAT GUY.)
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oh, and i suppose you could ask them not to play arrogant jerks, too

ryan