A General Equilibrium Approach to the Luxury Tax

Stefano Bosi ()
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Stefano Bosi: EPEE, University of Evry-Val d’Essonne

No 00-02, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: Individuals care about appearances and buy luxury goods to signal a social status. A widespread opinion is that the production of conspicuous goods is socially undesirable, because it waste the resources of the economy to implement a sort of vanity game among individuals. A luxury tax could be designed to direct these resources towards more essential productions. The goal of the paper is to set a general equilibrium model, where the demand of conspicuous good is properly conceived as a signaling game, to compute an optimal luxury tax.

Keywords: conspicuous consumption; luxury tax (search for similar items in EconPapers)
JEL-codes: D11 D50 H20 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2000
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