Measuring Consumption Externalities
AbstractEstimation and measurement of consumption externalities are still challenging problems in applied research. In this paper, externalities as Nash equilibrium are estimated using consumer demand theory and a large data set. We estimate Nash equilibrium consumption externalities in petrol budget shares of households living in a metropolitan area in UK. The reaction curves are derived from an Almost Ideal Demand System (AIDS) with externalities. A continuous set of ten year cross sections from the Family Expenditure Surveys is used. In each year, income decile cohorts are created. Results of 2SLS with Panel Data are presented after 2SLS estimates with pooling cross sections have been discussed. Results give evidence that the household petrol consumption pattern is explained by income and externality variables. We also suggest that in order to internalise the negative externality effect, households should be taxed independently of household income.
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Bibliographic InfoPaper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number wp840.
Date of creation: Jul 2012
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Find related papers by JEL classification:
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D62 - Microeconomics - - Welfare Economics - - - Externalities
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-23 (All new papers)
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