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.
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Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number
03-25.
Length: 33 pages Date of creation: Jan 2002 Date of revision:
May 2003 Handle: RePEc:kud:kuiedp:0325
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Scotchmer, Suzanne, 2002.
"Local public goods and clubs,"
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 29, pages 1997-2042
Elsevier.
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Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999.
"Clubs and the Market,"
Econometrica,
Econometric Society, vol. 67(5), pages 1185-1218, September.
Other versions:
Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999.
"Clubs and the Market,"
Discussion Papers
99-04, University of Copenhagen. Department of Economics.
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