Consumption, Status and Redistribution

Ed Hopkins and Tatiana Kornienko

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: This paper considers the effect of inequality when there are concerns for status. We analyse the effects of linear redistributive taxes in an economy where agents' utility depends both on consumption and on their rank in the distribution of consumption of a positional good. This increase in equality increases the degree of social competition. The equilibrium level of expenditure on the positional good rises for most agents with the possible exception of some with above average income. Equilibrium utility falls for those with average and above income, while the utility of the poor may (or may not) rise.

Keywords: status; relative standing; income inequality; consumption externalities (search for similar items in EconPapers)
JEL-codes: C72 D11 D31 D62 (search for similar items in EconPapers)
Pages: 16
Date: 2004-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Consumption, Status and Redistribution (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:127

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