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When Samuelson Met Veblen Abroad: National and Global Public Good Provision when Social Comparisons Matter

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  • Thomas Aronsson
  • Olof Johansson-Stenman

Abstract

type="main" xml:id="ecca12058-abs-0001"> 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.

Suggested Citation

  • Thomas Aronsson & Olof Johansson-Stenman, 2014. "When Samuelson Met Veblen Abroad: National and Global Public Good Provision when Social Comparisons Matter," Economica, London School of Economics and Political Science, vol. 81(322), pages 224-243, April.
    • Handle: RePEc:bla:econom:v:81:y:2014:i:322:p:224-243
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    3. Aart Gerritsen & Harald W. Lang, 2018. "Hirschman's tunnel effect goes abroad: International dimensions of social comparison and subjective well-being," Working Papers tax-mpg-rps-2018-02, Max Planck Institute for Tax Law and Public Finance.
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    6. Aronsson, Thomas & Johansson-Stenman, Olof & Wendner, Ronald, 2019. "Charity, Status, and Optimal Taxation: Welfarist and Paternalist Approaches," Umeå Economic Studies 959, Umeå University, Department of Economics.
    7. Andreas Löschel & Dirk Rübbelke, 2014. "On the Voluntary Provision of International Public Goods," Economica, London School of Economics and Political Science, vol. 81(322), pages 195-204, April.
    8. Aronsson, Thomas & Johansson-Stenman, Olof, 2015. "Keeping up with the Joneses, the Smiths and the Tanakas: On international tax coordination and social comparisons," Journal of Public Economics, Elsevier, vol. 131(C), pages 71-86.
    9. repec:grz:wpaper:2016-01 is not listed on IDEAS
    10. Aronsson, Thomas & Johansson-Stenman, Olof, 2014. "State-variable public goods and social comparisons," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 390-410.
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    12. Pedro Naso; Tania Theoduloz; Nicholas Tyack; Dambala Gelo; Mare Sarr; Timothy Swanson, 2021. "Using Information to Improve Global Cooperation: A Climate Change Experiment," CIES Research Paper series 72-2021, Centre for International Environmental Studies, The Graduate Institute.

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    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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