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Resource-grabbing by status-conscious agents

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  • Long, Ngo Van
  • Wang, Shengzu

Abstract

We introduce a dynamic model of resource-grabbing by status-conscious agents, i.e., agents value not only their absolute consumption levels, but also the relative status within their reference group. We explore the effect of the concern for relative consumption on the growth rate and the welfare of an economy where agents appropriate from a common property resource. Our model shows that the greater is agents' concern about their relative status, the more aggressively they tend to behave. Consequently, social welfare is lower because the growth rate of the public asset is reduced due to higher extraction rate. We also consider the effect of increased heterogeneity, and show that social welfare decreases as the distribution of status-consciousness among agents widens.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 89 (2009)
Issue (Month): 1 (May)
Pages: 39-50

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Handle: RePEc:eee:deveco:v:89:y:2009:i:1:p:39-50

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Web page: http://www.elsevier.com/locate/devec

Related research

Keywords: Rent-seeking Status Relative consumption Welfare Heterogeneity;

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References

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  12. Ngo Van Long & Gerhard Sorger, 2004. "Insecure Property Rights and Growth: The Roles of Appropriation Costs, Wealth Effects, and Heterogeneity," CESifo Working Paper Series 1253, CESifo Group Munich.
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  16. Bill Dupor & Wen-Fang Liu, 2003. "Jealousy and Equilibrium Overconsumption," American Economic Review, American Economic Association, vol. 93(1), pages 423-428, March.
  17. Francisco Alvarez-Cuadrado & Ngo Van Long, 2008. "Relative Consumption and Resource Extraction," CIRANO Working Papers 2008s-27, CIRANO.
  18. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, vol. 67(2), pages 455-470, April.
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Citations

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Cited by:
  1. Kenji Fujiwara, 2010. "Losses from competition in a dynamic game model of a renewable resource oligopoly," Discussion Paper Series 51, School of Economics, Kwansei Gakuin University, revised Apr 2010.
  2. Zhang Wei-Bin, 2011. "Economic Growth And Dynamics Of Renewable Resource With Housing, Agricultural And Resource Land Use," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 6(2), pages 151-174, August.
  3. Ngo Long, 2011. "Dynamic Games in the Economics of Natural Resources: A Survey," Dynamic Games and Applications, Springer, vol. 1(1), pages 115-148, March.
  4. Francisco Alvarez-Cuadrado & Ngo Van Long, 2008. "Relative Consumption and Resource Extraction," CIRANO Working Papers 2008s-27, CIRANO.
  5. Douadia Bougherara & Sandrine Costa & Gilles Grolleau & Lisette Ibanez, 2010. "Can Positional Concerns Enhance the Private provision of Public Goods?," Working Papers 10-04, LAMETA, Universtiy of Montpellier, revised Apr 2010.

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