State-variable public goods and social comparisons
2014 (English)In: Journal of Environmental Economics and Management, ISSN 0095-0696, E-ISSN 1096-0449, Vol. 68, no 2, 390-410 p.Article in journal (Refereed) Published
The optimal provision of a state-variable public good, where the global climate is the prime example, is analyzed in a model where people care about their relative consumption. We consider both keeping-up-with-the-Joneses preferences (where people compare their own current consumption with others’ current consumption) and catching-up-with-the-Joneses preferences (where people compare their own current consumption with others’ past consumption) in an economy with two productivity types, overlapping generations, and optimal nonlinear income taxation. The extent to which the conventional rules for provision of state-variable public goods (a dynamic analog of the Samuelson rules) ought to be modified is shown to clearly depend on the strength of the relative concerns of both kinds, but also on the preference elicitation format.
Place, publisher, year, edition, pages
Elsevier, 2014. Vol. 68, no 2, 390-410 p.
state-variable public goods, asymmetric information, relative consumption, status, positional preferences, climate policy
Research subject Economics
IdentifiersURN: urn:nbn:se:umu:diva-92076DOI: 10.1016/j.jeem.2014.07.001ISI: 000344208000011OAI: oai:DiVA.org:umu-92076DiVA: diva2:739504