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Social network structure and status competition

Author

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  • Michael Alexeev
  • Yao-Yu Chih

Abstract

In status competition studies, the utility of heterogeneous individuals typically depends on an economy-wide average indicator of status. In our model, emulative and jealous agents are embedded in an exogenous network where agent-specific reference group is determined by the direct link emanating from the agent. Similarly to Ghiglino and Goyal (2010) but in a somewhat different framework, we show that individual consumption is proportional to the agent's outbound Katz-Bonacich network centrality measure and equilibrium is generally inefficient. More important, the negative externality associated with each agent depends on her inbound centrality measurethe conspicuousness index. A tax based on this index combined with a uniform lump-sum transfer attains efficiency.

Suggested Citation

  • Michael Alexeev & Yao-Yu Chih, 2015. "Social network structure and status competition," Canadian Journal of Economics, Canadian Economics Association, vol. 48(1), pages 64-82, February.
    • Handle: RePEc:cje:issued:v:48:y:2015:i:1:p:64-82
    DOI: 10.1111/caje.12121
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    Cited by:

    1. Yan, Eric & Feng, Qu & Ng, Yew-Kwang, 2021. "Do we need ramsey taxation? Our existing taxes are largely corrective," Economic Modelling, Elsevier, vol. 94(C), pages 526-538.
    2. Yao-Yu Chih, 2018. "Status competition and benevolence in social networks," Oxford Economic Papers, Oxford University Press, vol. 70(1), pages 141-162.
    3. Huang, Shaoan & Lien, Jaimie W. & Yang, Siqun & Zheng, Jie, 2024. "Lump-sum tax or flat income tax? Welfare implications of taxation policy in the presence of social comparison," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 20-33.
    4. Zhenhua Feng & Jaimie W. Lien & Jie Zheng, 2018. "Keeping up with the Neighbors: Social Interaction in a Production Economy," Mathematics, MDPI, vol. 6(9), pages 1-14, September.
    5. Zeng Lian & Jaimie W. Lien & Lin Lu & Jie Zheng, 2021. "International trade with social comparisons," Review of International Economics, Wiley Blackwell, vol. 29(3), pages 533-556, August.

    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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