Private versus public consumption within groups: testing the nature of goods from aggregate data

Laurens Cherchye, Bram De Rock and Vincenzo Platino

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Abstract: We study the testability implications of public versus private consumption. The distinguishing feature of our approach is that we start from a revealed preference characterization of collectively rational behavior. Remarkably, we find that assumptions regarding the public or private nature of specific goods do have testability implications, even if one only observes the aggregate group consumption. In fact, these testability implications apply as soon as the analysis includes three goods and four obervations. This stands in sharp contrast with existing results that start from a differential characterization of collectively rational behavior. In our opinion, our revealed preference approach obtains stronger testability conclusions because it focuses on a global characterization of collective rationality, whereas the differential approach starts from a local characterization.

Keywords: Collective model; revealed preferences; public goods; private goods; consumption externalities; Les modèles collectifs; les préférences révélées; les biens publics; biens privées; externalités (search for similar items in EconPapers)
Date: 2010-08
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00543999v1
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Published in 2010

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Related works:
Journal Article: Private versus public consumption within groups: testing the nature of goods from aggregate data (2013)
Working Paper: Private versus public consumption within groups: testing the nature of goods from aggregate data (2013)
Working Paper: Private versus public consumption within groups: testing the nature of goods from aggregate data (2010)
Working Paper: Private versus public consumption within groups: testing the nature of goods from aggregate data (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00543999

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