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

Laurens Cherchye, Bram De Rock and Vincenzo Platino

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

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: Multi-person group consumption; collective model; revealed preferences; public goods; private goods; consumption externalities (search for similar items in EconPapers)
JEL-codes: C14 D11 D12 D13 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2010-08
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http://mse.univ-paris1.fr/pub/mse/CES2010/10090.pdf (application/pdf)

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:mse:cesdoc:10090

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