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Consumption Externalities, Rental Markets and Purchase Clubs

In: Institutions, Equilibria and Efficiency

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  • Suzanne Scotchmer

    (University of California)

Abstract

Summary A premise of general equilibrium theory is that private goods are rival. Nevertheless, many private goods are shared, e.g., through borrowing, through co-ownership, or simply because one person’s consumption affects another person’s wellbeing. I 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. Two important applications are to rental markets and “purchase clubs,” in which members share the goods that they have individually purchased.

Suggested Citation

  • Suzanne Scotchmer, 2006. "Consumption Externalities, Rental Markets and Purchase Clubs," Studies in Economic Theory, in: Christian Schultz & Karl Vind (ed.), Institutions, Equilibria and Efficiency, chapter 19, pages 351-369, Springer.
    • Handle: RePEc:spr:steccp:978-3-540-28161-0_19
    DOI: 10.1007/3-540-28161-4_19
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    Cited by:

    1. is not listed on IDEAS
    2. Gersbach, Hans & Haller, Hans, 2010. "Club theory and household formation," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 715-724, September.
    3. Staab, Manuel, 2024. "The formation of social groups under status concern," Journal of Economic Theory, Elsevier, vol. 222(C).
    4. Emilson Caputo Delfino Silva & Richard Corne, 2014. "Prestige Clubs," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41st Brazilian Economics Meeting] 131, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    5. Yooki Park & Suzanne Scotchmer, 2004. "Digital Rights Management and the Pricing of Digital Products," Working Papers 04-09, NET Institute, revised Oct 2004.
    6. Hal R. Varian, 2005. "Copying and Copyright," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 121-138, Spring.
    7. Jean-Marc Bonnisseau & Elena Mercato, 2010. "Externalities, consumption constraints and regular economies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 44(1), pages 123-147, July.
    8. Pieter H.M. RUYS & Jan BRUIL & Henry DIX, 2007. "Modes Of Governance In The Dutch Social Housing Sector," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 78(3), pages 381-413, September.

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