Consumption Externalities, Rental Markets and Purchase Clubs

Suzanne Scotchmer

No 03-25, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: A premise of general equilibrium theory is that private goods are rival. Nevertheless, many private goods are shared, e.g., through barter, through co-ownership, or simply because one person’s consumption affects another person’s wellbeing. We analyze consumption externalities from the perspective of club theory, and argue that, provided consumption externalities are limited in scope, they can be internalized through membership fees to groups. Our main applications are to rental markets and “purchase clubs” in which members share the goods that they have individually purchased.

Pages: 33 pages
Date: 2002-01, Revised 2003-05
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Related works:
Chapter: Consumption Externalities, Rental Markets and Purchase Clubs (2006)
Journal Article: Consumption externalities, rental markets and purchase clubs (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:0325

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