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Ronald Wendner - One of the best experts on this subject based on the ideXlab platform.

  • Ramsey, Pigou, Heterogeneous Agents, and Nonatmospheric Consumption Externalities
    Journal of Public Economic Theory, 2014
    Co-Authors: Ronald Wendner
    Abstract:

    This paper analyzes the effects of nonatmospheric Consumption Externalities on optimal commodity taxation and on the social cost and optimal levels of public good provision. A negative Consumption externality, by lowering the social cost of public good provision, may require the second-best level of public good provision to exceed the first-best level. If those households who are most important for building up the Consumption reference level respond the least to commodity taxation, the second-best commodity tax rate may fall short of the first-best rate. Moreover, in this case, heterogeneity may imply an equity-efficiency tradeoff. This tradeoff is present only if the Consumption externality is of the nonatmospheric type.

  • Asymmetric and Non-atmospheric Consumption Externalities, and Efficient Consumption Taxation
    Journal of Public Economics, 2013
    Co-Authors: Paul Eckerstorfer, Ronald Wendner
    Abstract:

    Abstract We analyze the effects of a generalized class of negative Consumption Externalities (asymmetric and non-atmospheric) on the structure of efficient commodity tax programs. Households are not only concerned about Consumption reference levels — that is, they gain utility from “keeping up with the Joneses” — but they also exhibit altruism. Two sets of efficient tax regimes are compared, based, on a welfarist- and a non-welfarist optimality criterion, respectively. Altruism turns out not to be at odds with the Consumption Externalities. Rather, altruism implicates a bound on efficient utility allocations. A non-welfarist government tolerates less inequality than a welfarist one. In the welfarist (non-welfarist) case, first-best personalized commodity tax rates respond highly sensitively (barely) to whether or not a Consumption externality is asymmetric or non-atmospheric. If personalized commodity tax rates are not available (second-best case), the tax rate on a non-positional good is typically different from zero for corrective reasons. For plausible functional forms and parameter values, numerical simulations suggest that second-best tax rates are rather insensitive with respect to both the optimality criterion and the “nature” of the Consumption externality.

  • will the Consumption Externalities effects in the ramsey model please stand up
    Economics Letters, 2011
    Co-Authors: Ronald Wendner
    Abstract:

    Abstract According to the prior literature, in a Ramsey model, Consumption Externalities have no impact on steady state behavior, once labor supply is exogenous. In contrast, this paper argues that — in the presence of technical change — Consumption Externalities always affect steady state behavior, via their impact on the elasticity of marginal utility of Consumption.

  • Will the Consumption Externalities' effects in the Ramsey model please stand up?
    Economics Letters, 2011
    Co-Authors: Ronald Wendner
    Abstract:

    Abstract According to the prior literature, in a Ramsey model, Consumption Externalities have no impact on steady state behavior, once labor supply is exogenous. In contrast, this paper argues that — in the presence of technical change — Consumption Externalities always affect steady state behavior, via their impact on the elasticity of marginal utility of Consumption.

  • Ramsey, Pigou, heterogenous agents, and non-atmospheric Consumption Externalities
    SSRN Electronic Journal, 2011
    Co-Authors: Ronald Wendner
    Abstract:

    This paper analyzes the effects of non-atmospheric Consumption Externalities on optimal commodity taxation and on the social cost and optimal levels of public good provision. A negative Consumption externality, by lowering the social cost of public good provision, may require the second-best level of public good provision to exceed the first-best level. If those households who are most important for building up the Consumption reference level respond the least to commodity taxation, heterogeneity may imply an equity-efficiency tradeoff. This tradeoff is present only if the Consumption externality is of the non-atmospheric type.

Suzanne Scotchmer - One of the best experts on this subject based on the ideXlab platform.

  • Consumption Externalities, rental markets and purchase clubs
    Economic Theory, 2005
    Co-Authors: Suzanne Scotchmer
    Abstract:

    A premise of general equilibrium theory is that private goods are rival. Nevertheless, many private goods are shared, e.g., through borrowing, through co-ownership, or simply because one person’s Consumption affects another person’s wellbeing. I analyze Consumption Externalities from the perspective of club theory, and argue that, provided Consumption Externalities are limited in scope, they can be internalized through membership fees to groups. Two important applications are to rental markets and “purchase clubs,” in which members share the goods that they have individually purchased. Copyright Springer-Verlag Berlin/Heidelberg 2005Consumption Externalities, Clubs, Purchase clubs, Rental markets.,

  • Consumption Externalities, rental markets and purchase clubs
    Economic Theory, 2005
    Co-Authors: Suzanne Scotchmer
    Abstract:

    A premise of general equilibrium theory is that private goods are rival. Nevertheless, many private goods are shared, e.g., through borrowing, through co-ownership, or simply because one person’s Consumption affects another person’s wellbeing. I analyze Consumption Externalities from the perspective of club theory, and argue that, provided Consumption Externalities are limited in scope, they can be internalized through membership fees to groups. Two important applications are to rental markets and “purchase clubs,” in which members share the goods that they have individually purchased.

  • Consumption Externalities, Rental Markets and Purchase Clubs
    2002
    Co-Authors: Suzanne Scotchmer
    Abstract:

    A premise of general equilibrium theory is that private goods are rival. Nevertheless, many private goods are shared, e.g., through barter, through co-ownership, or simply because one person’s Consumption affects another person’s wellbeing. We analyze Consumption Externalities from the perspective of club theory, and argue that, provided Consumption Externalities are limited in scope, they can be internalized through membership fees to groups. Our main applications are to rental markets and “purchase clubs” in which members share the goods that they have individually purchased.

Hervé Crès - One of the best experts on this subject based on the ideXlab platform.

  • Symmetric Smooth Consumption Externalities
    Sciences Po publications, 1996
    Co-Authors: Hervé Crès
    Abstract:

    Based on Arrow's model of a pure exchange economy with smooth Consumption Externalities, this paper studies how the internalization of external effects through a network of markets between agents introduces symmetry breakings in the set of equilibria. It shows indeed how identical agents can be treated asymmetrically by complete markets.

  • Symmetric Smooth Consumption Externalities
    Journal of Economic Theory, 1996
    Co-Authors: Hervé Crès
    Abstract:

    Abstract Based on Arrow's model of a pure exchange economy with smooth Consumption Externalities, this paper studies how the internalization of external effects through a network of markets between agents introduces symmetry breakings in the set of equilibria. It shows indeed how identical agents can be treated asymmetrically by complete markets. This work emphasizes that equilibrium allocations may be very sensitive to the way Coase-type rights are distributed:Journal of Economic LiteratureClassification Numbers: D50, D62, H23, K11.

Stephen J. Turnovsky - One of the best experts on this subject based on the ideXlab platform.

  • Consumption Externalities: a representative consumer model when agents are heterogeneous
    Economic Theory, 2007
    Co-Authors: Cecilia García-peñalosa, Stephen J. Turnovsky
    Abstract:

    We examine a growth model with Consumption Externalities where agents differ in their initial capital endowment and their reference group. We show under which conditions the aggregate equilibrium with heterogeneous agents replicates that obtained with a representative consumer, despite the fact that different individuals have different Consumption levels. Next we consider the implications of the presence of Consumption Externalities for the long-run distributions of income and wealth. We find that, in a growing economy, “keeping up with the Joneses” results in less inequality than would prevail in an economy with no Consumption Externalities.

  • Consumption Externalities, production Externalities, and long-run macroeconomic efficiency
    Journal of Public Economics, 2005
    Co-Authors: Stephen J. Turnovsky
    Abstract:

    Abstract We analyze the effects of Consumption and production Externalities on capital accumulation. We show that the importance of Consumption Externalities depends upon the elasticity of labor supply. If the labor supply is inelastic, Consumption Externalities cause no long-run distortions. Whether there are distortions along the transitional path depends upon consumer preferences. The effects of production Externalities are more pervasive; they exert long-run distortionary effects irrespective of labor supply. The optimal taxation to correct for the distortions created by the Externalities is characterized. We analyze both stationary and endogenously growing economies, and while there are many parallels in how Externalities impact, there are also important differences.

  • Consumption Externalities, Production Externalities, and the Accumulation of Capital
    2003
    Co-Authors: Stephen J. Turnovsky
    Abstract:

    We analyze the effects of Consumption and production Externalities on the long-run rate of capital accumulation. We show that the importance of Consumption Externalities depends upon whether or not labor supply is fixed. In the case that it is fixed, they have no long-run effects. Whether they have any distortionary effect on the transitional path depends upon the form of utility function. The effects of production Externalities are more pervasive; they exert long-run distortionary effects irrespective of labor supply. The optimal taxation to correct for the distortions created by the Externalities is characterized. We analyze both stationary and endogenously growing economies, and while there are many parallels in how Externalities impact, there are also important differences.

Yasuhiro Nakamoto - One of the best experts on this subject based on the ideXlab platform.

  • Consumption Externalities and equilibrium dynamics with heterogeneous agents
    Mathematical Social Sciences, 2012
    Co-Authors: Kazuo Mino, Yasuhiro Nakamoto
    Abstract:

    Abstract This paper explores the effect of Consumption Externalities on equilibrium dynamics of a standard neoclassical growth model in which there are two types of agents. To emphasize the presence of heterogeneous agents, we distinguish intergroup Consumption Externalities from intragroup Consumption Externalities. We show that if there are intragroup Consumption Externalities alone, then the steady state equilibrium satisfies saddle-point stability and the equilibrium path of the economy is uniquely determined. In contrast, even if the intragroup Consumption Externalities do not exist, the intergroup external effects of Consumption may yield either instability or local indeterminacy of the steady-state equilibrium. In addition to analytical considerations, we show the relationship between the stability and the Consumption Externalities in numerical examples.

  • Consumption Externalities and Wealth Distribution in a Neoclassical Growth Model
    2009
    Co-Authors: Kazuo Mino, Yasuhiro Nakamoto
    Abstract:

    This paper explores the distributional effect of Consumption Externalities in a neoclassical growth model with heterogeneous agents. The economy consists of two types of agents each of which perceives different degrees of intergroup as well as intragroup Consumption external effects. It is shown that the stationary distribution and transitional dynamics are highly sensitive to the specification of preference structures of each type of agents.

  • Consumption Externalities with endogenous time preference
    Journal of Economics, 2009
    Co-Authors: Yasuhiro Nakamoto
    Abstract:

    This paper shows that in a model with inelastic labor supply, Consumption Externalities have impacts on stationary Consumption and capital. The key element in observing the effects of Consumption Externalities on stationary Consumption and capital is the endogeneity of the time preference rate, which depends on future-oriented resources rather than on private Consumption. We conclude that when individuals experience jealousy, they become more impatient, leading to a lower level of capital stock and a higher level of Consumption relative to those of the social optimum, while when they experience admiration, these relationships are reversed. We examine an optimal tax policy that replicates the socially optimal path in the centrally planned economy. Finally, using numerical analysis we explore how this economy evolves through time.

  • Consumption Externalities and Equilibrium Dynamics with Heterogenous Agents
    2008
    Co-Authors: Kazuo Mino, Yasuhiro Nakamoto
    Abstract:

    This paper explores the effect of Consumption Externalities on equilibrium dynamics of a standard neoclassical growth model in which there are two types of agents. To emphasize the presence of heterogenous agents, we distinguish intergroup Consumption Externalities from intragroup Consumption Externalities. We show that if the intragroup Externalities dominates the intrergroup external effects, then the steady state equilibrium satisfies saddle-point stability and the equilibrium path of the economy is uniquely determined. In contrast, if the intergroup external effects of Consumption are strong enough, the steady-state equilibrium is either unstable or locally indeterminate. Based on the analytical as well as numerical considerations, we give intuitive implications of stability conditions.