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When Samuelson Met Veblen Abroad: National and Global Public Good Provision when Social Comparisons Matter
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.
Department of Economics, School of Business, Economics and Law, University of Gothenburg, Gothenburg, Sweden.
2014 (English)In: Economica, ISSN 0013-0427, E-ISSN 1468-0335, Vol. 81, no 322, 224-243 p.Article in journal (Refereed) Published
Abstract [en]

This paper derives Pareto-efficient provision rules for national and global public goods in a two-country world, where each individual cares about his or her relative consumption of private goods compared to other domestic and foreign residents. We contrast these rules with those following from a non-cooperative Nash equilibrium. Both national and global public goods are underprovided in Nash equilibrium under such relative consumption concerns. Finally, when individuals also care about the relative consumption of national public goods, based on between-country comparisons, the optimal provision rule depends on whether or not the national public goods are less positional than private consumption.

Place, publisher, year, edition, pages
John Wiley & Sons, 2014. Vol. 81, no 322, 224-243 p.
Keyword [en]
Public goods, relative consumption, inter-jurisdictional comparison, status, positional goods
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Research subject
URN: urn:nbn:se:umu:diva-80666DOI: 10.1111/ecca.12058ISI: 000332599000003ScopusID: 2-s2.0-84895895015OAI: diva2:650723
Swedish Research Council, 421-2010-1420

Även utgiven som: Umeå economic Studies. (2012), Nr 843.

Available from: 2013-09-23 Created: 2013-09-23 Last updated: 2014-12-22Bibliographically approved

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