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A Theory of Association: Social Status, Prices and Markets

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  • Basu, Kaushik

Abstract

The utility from some commodities depends on the allocation rule used to distribute them because, by the acquisition of such a commodity, a person tries to gain "association" with its other recipients. Such a commodity is called an association good and it is shown that its existence can jeopardize the economist's standard model of markets. For example, demand may not equal supply in equilibrium and the very use of the price mechanism to distribute an association good could diminish its value. These and other properties are illustrated by analyzing some specific association goods, like club memberships and school admissions. Copyright 1989 by Royal Economic Society.

Suggested Citation

  • Basu, Kaushik, 1989. "A Theory of Association: Social Status, Prices and Markets," Oxford Economic Papers, Oxford University Press, vol. 41(4), pages 653-671, October.
  • Handle: RePEc:oup:oxecpp:v:41:y:1989:i:4:p:653-71
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    Cited by:

    1. Kaushik Basu & James E.Foster & S. Subramanian, 2000. "Isolated and Proximate Illiteracy And Why these Concepts Matter in Measuring Literacy and Designing Education Programmes," Vanderbilt University Department of Economics Working Papers 0002, Vanderbilt University Department of Economics.
    2. Hamermesh, Daniel S. & Pfann, Gerard A., 2009. "Markets for Reputation: Evidence on Quality and Quantity in Academe," IZA Discussion Papers 4610, Institute for the Study of Labor (IZA).
    3. Catherine Bros, 2008. "Power distribution and endogenous segregation," Post-Print halshs-00204974, HAL.
    4. BARILLOT Sébastien & BALLET Jérôme, 2015. "Discriminatory club and moral ability to co-operate," Cahiers du GREThA 2015-04, Groupe de Recherche en Economie Théorique et Appliquée.
    5. Khamis, Melanie & Prakash, Nishith & Siddique, Zahra, 2012. "Consumption and social identity: Evidence from India," Journal of Economic Behavior & Organization, Elsevier, vol. 83(3), pages 353-371.
    6. Fershtman, Chaim & Weiss, Yoram, 1993. "Social Status, Culture and Economic Performance," Economic Journal, Royal Economic Society, vol. 103(419), pages 946-959, July.
    7. Moav, Omer & Neeman, Zvika, 2008. "Conspicuous Consumption, Human Capital and Poverty," CEPR Discussion Papers 6864, C.E.P.R. Discussion Papers.
    8. Fabio Maccheroni & Massimo Marinacci & Aldo Rustichini, 2012. "Social Decision Theory: Choosing within and between Groups," Review of Economic Studies, Oxford University Press, vol. 79(4), pages 1591-1636.
    9. Robert Oxoby, "undated". "Social Inference and Occupational Choice: Type-Based Biases in a Bayesian Model of Class Formation," Working Papers 2009-07, Department of Economics, University of Calgary, revised 11 Jan 2009.
    10. Marco Alderighi, 2009. "Competition (sorting effect) may favour a monopolist," Journal of Economics, Springer, vol. 98(3), pages 247-255, December.
    11. Gordon Winston & David Zimmerman, 2004. "Peer Effects in Higher Education," NBER Chapters,in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 395-424 National Bureau of Economic Research, Inc.
    12. Omer Moav and & Zvika Neeman, 2012. "Saving Rates and Poverty: The Role of Conspicuous Consumption and Human Capital," Economic Journal, Royal Economic Society, vol. 122(563), pages 933-956, September.
    13. Daniel S. Hamermesh & Peter Schmidt, 2001. ""Hall of Fame" Voting: The Econometric Society," NBER Working Papers 8435, National Bureau of Economic Research, Inc.
    14. Jellal, Mohamed, 2014. "Diaspora transferts statut social et inégalité
      [Diaspora remittances social status and inequality]
      ," MPRA Paper 57325, University Library of Munich, Germany.
    15. Kulshreshtha, Praveen, 2007. "An efficiency and welfare classification of rationing by waiting in the presence of bribery," Journal of Development Economics, Elsevier, vol. 83(2), pages 530-548, July.
    16. Kaushik Basu, 2018. "Markets and Manipulation: Time for a Paradigm Shift?," Journal of Economic Literature, American Economic Association, vol. 56(1), pages 185-205, March.
    17. Oxoby, Robert J., 2014. "Social inference and occupational choice: Type-based beliefs in a Bayesian model of class formation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 51(C), pages 30-37.
    18. Zhang, W.-B., 2014. "Ethnic Human Capital Externalities and Inequality in a General Equilibrium Growth Model," Journal of the New Economic Association, New Economic Association, vol. 21(1), pages 33-54.
    19. Gordon C. Winston, 1999. "Subsidies, Hierarchy and Peers: The Awkward Economics of Higher Education," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 13-36, Winter.
    20. Prüfer, J. & Walz, U., 2007. "How does Clubs' Organizational Design Affect Competition Among Clubs?," Discussion Paper 2007-27, Tilburg University, Center for Economic Research.
    21. Fershtman, Chaim & Weiss, Yoram, 1991. "Social Status, Culture and Economic Performance," Foerder Institute for Economic Research Working Papers 275519, Tel-Aviv University > Foerder Institute for Economic Research.
    22. Matthew Braham & Friedel Bolle, 2006. "A difficulty with oaths: On trust, trustworthiness, and signalling," European Journal of Law and Economics, Springer, vol. 22(3), pages 219-232, November.
    23. BERGOUIGNAN Marie-Claude, 2015. "Eco-innovations: which new paths for the Aquitaine wood industry?," Cahiers du GREThA 2015-01, Groupe de Recherche en Economie Théorique et Appliquée.
    24. Coelho, Philip R. P. & McClure, James E., 1998. "Social context and the utility of wealth: Addressing the Markowitz challenge," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 305-314, November.
    25. Yamada, Katsunori, 2008. "Macroeconomic implications of conspicuous consumption: A Sombartian dynamic model," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 322-337, July.

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