Public Goods, Transferable Utility and Divorce Laws

Pierre Chiappori, Murat Iyigun and Yoram Weiss

No 2646, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We reconsider the well known Becker-Coase (BC) argument, according to which changes in divorce laws should not affect divorce rates, in the context of households which consume public goods in addition to private goods. For this result to hold, utility must be transferable both within marriage and upon divorce, and the marginal rate of substitution between public and private consumption needs to be invariant in marital status. We develop a model in which couples consume public goods and show that if divorce alters the way some goods are consumed (either because some goods that are public in marriage become private in divorce or because divorce affects the marginal rate of substitution between public and private goods), then the Becker-Coase theorem holds only under strict quasi-linearity. We conclude that, in general, divorce laws will influence the divorce rate, although the impact of a change in divorce laws can go in either direction.

Keywords: Becker-Coase theorem; collective model; divorce rates (search for similar items in EconPapers)
JEL-codes: C78 D61 D70 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2007-02
New Economics Papers: this item is included in nep-law, nep-pbe and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Published - published as 'The Becker-Coase Theorem Reconsidered' in: Journal of Demographic Economics, 2015, 81 (2), 157-77

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