Resource-grabbing by status-conscious agents

Ngo Van Long and Shengzu Wang ()

Journal of Development Economics, 2009, vol. 89, issue 1, pages 39-50

Abstract: We introduce a dynamic model of resource-grabbing by status-conscious agents, i.e., agents value not only their absolute consumption levels, but also the relative status within their reference group. We explore the effect of the concern for relative consumption on the growth rate and the welfare of an economy where agents appropriate from a common property resource. Our model shows that the greater is agents' concern about their relative status, the more aggressively they tend to behave. Consequently, social welfare is lower because the growth rate of the public asset is reduced due to higher extraction rate. We also consider the effect of increased heterogeneity, and show that social welfare decreases as the distribution of status-consciousness among agents widens.

Keywords: Rent-seeking; Status; Relative; consumption; Welfare; Heterogeneity (search for similar items in EconPapers)
Date: 2009
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Working Paper: RESOURCE-GRABBING BY STATUS-CONSCIOUS AGENTS (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:eee:deveco:v:89:y:2009:i:1:p:39-50

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