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Do positional preferences cause welfare gains?

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  • Douadia Bougherara

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)

  • Sandrine Costa-Migeon Costa

    (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)

  • Gilles Grolleau

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC))

  • Lisette Ibanez

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)

Abstract

We examine conditions for which positional preferences for voluntary contribution to a public good can be welfare enhancing in a one-shot public good game, where individuals may also enjoy a return from their contribution ranking. We show that positional preferences are welfare-increasing only under certain conditions. We find that when agents' positional preferences are homogeneous, they overinvest in the public good compared to equilibrium with no positional preferences, resulting in a zero-sum positional race with a higher public good provision. When agents have heterogeneous positional preferences, the overall impact on social welfare is positive when endowments are homogeneous.

Suggested Citation

  • Douadia Bougherara & Sandrine Costa-Migeon Costa & Gilles Grolleau & Lisette Ibanez, 2019. "Do positional preferences cause welfare gains?," Post-Print halshs-02137164, HAL.
    • Handle: RePEc:hal:journl:halshs-02137164
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02137164v1
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    References listed on IDEAS

    as
    1. Robert H. Frank, 2005. "Positional Externalities Cause Large and Preventable Welfare Losses," American Economic Review, American Economic Association, vol. 95(2), pages 137-141, May.
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    Cited by:

    1. Francisco Cabo & Alain Jean-Marie & Mabel Tidball, 2022. "Positional and conformist effects in public good provision. Strategic interaction and inertia," Post-Print hal-03947724, HAL.
    2. Francisco Cabo & Alain Jean-Marie & Mabel Tidball, 2022. "Positional effects in public good provision. Strategic interaction and inertia," Post-Print hal-03947632, HAL.
    3. Francisco Cabo & Alain Jean‐Marie & Mabel Tidball, 2024. "Positional and conformist effects in voluntary public good provision," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 26(2), February.

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    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • D6 - Microeconomics - - Welfare Economics

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