A Human Relations Paradox
AbstractWe present a variant of a general equilibrium model with group formation to study how changes of non-consumptive beneï¬ts from group formation impact on the well-being of group members. We identify a human relations paradox: Positive externalities increase, but none of the group members gains in equilibrium. Moreover, a member who experiences an increase of positive emotional beneï¬ts in a group may become worse off in equilibrium.
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Bibliographic InfoPaper provided by Virginia Polytechnic Institute and State University, Department of Economics in its series Working Papers with number e07-29.
Length: 9 pages
Date of creation: 2011
Date of revision:
group formation; competitive markets; human relation; exit;
Other versions of this item:
- D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition
- D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
- D60 - Microeconomics - - Welfare Economics - - - General
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- Postlewaite, Andrew, 1979. "Manipulation via Endowments," Review of Economic Studies, Wiley Blackwell, vol. 46(2), pages 255-62, April.
- Gersbach, Hans & Haller, Hans, 2011. "Groups, collective decisions and markets," Journal of Economic Theory, Elsevier, vol. 146(1), pages 275-299, January.
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