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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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File URL: http://www.sciencedirect.com/science/article/B6VBV-4TGS7KV-1/2/266217cafc7a56179a8b96efede89382
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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;

Other versions of this item:

Find related papers by JEL classification:

• C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
• D6 - Microeconomics - - Welfare Economics
• D9 - Microeconomics - - Intertemporal Choice and Growth
• O1 - Economic Development, Technological Change, and Growth - - Economic Development
• Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

References

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14. Baland, Jean-Marie & Francois, Patrick, 2000. "Rent-seeking and resource booms," Journal of Development Economics, Elsevier, vol. 61(2), pages 527-542, April.
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Citations

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Cited by:

1. Francisco Alvarez-Cuadrado & Ngo Van Long, 2008. "Relative Consumption and Resource Extraction," CIRANO Working Papers 2008s-27, CIRANO.
2. 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.
   
   • Fujiwara, Kenji, 2011. "Losses from competition in a dynamic game model of a renewable resource oligopoly," Resource and Energy Economics, Elsevier, vol. 33(1), pages 1-11, January.
3. 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.
4. 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.
5. Ngo Long, 2011. "Dynamic Games in the Economics of Natural Resources: A Survey," International Review of Economics, Springer, vol. 1(1), pages 115-148, March.
6. 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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