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Demand properties in household Nash equilibrium

Author

Listed:
  • Valérie Lechene

    (Institute for Fiscal Studies and University College London)

  • Ian Preston

    (Institute for Fiscal Studies and University College London)

Abstract

Please Note: This paper was updated in July 2007 We study noncooperative household models with two agents and several voluntarily contributed public goods, deriving the counterpart to the Slutsky matrix and demonstrating the nature of the deviation of its properties from those of a true Slutsky matrix in the unitary model. We demonstrate the importance of distinguishing between cases in which there are and are not jointly contributed public goods and provide results characterising both cases. Demand properties are contrasted with those for collective models and conclusions drawn regarding the possibility of empirically testing the collective model against noncooperative alternatives.

Suggested Citation

  • Valérie Lechene & Ian Preston, 2007. "Demand properties in household Nash equilibrium," IFS Working Papers W07/01, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:07/01
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    File URL: http://www.ifs.org.uk/wps/wp0701.pdf
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    References listed on IDEAS

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    1. Eduardo Ley, 1996. "On the private provision of public goods: a diagrammatic exposition," Investigaciones Economicas, Fundación SEPI, vol. 20(1), pages 105-123, January.
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    3. McElroy, Marjorie B & Horney, Mary Jean, 1990. "Nash-Bargained Household Decisions: Reply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(1), pages 237-242, February.
    4. Warr, Peter G., 1983. "The private provision of a public good is independent of the distribution of income," Economics Letters, Elsevier, vol. 13(2-3), pages 207-211.
    5. Manser, Marilyn & Brown, Murray, 1980. "Marriage and Household Decision-Making: A Bargaining Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 31-44, February.
    6. Lundberg, Shelly & Pollak, Robert A, 1993. "Separate Spheres Bargaining and the Marriage Market," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 988-1010, December.
    7. Valerie Lechene & Ian Preston & University College London and Institute for Fiscal Studies, 2005. "Household Nash Equilibrium with Voluntarily Contributed Public Goods," Economics Series Working Papers 226, University of Oxford, Department of Economics.
    8. McElroy, Marjorie B & Horney, Mary Jean, 1981. "Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 333-349, June.
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    Cited by:

    1. Cherchye, Laurens & De Rock, Bram & Vermeulen, Frederic, 2007. "The Revealed Preference Approach to Collective Consumption Behavior: Testing, Recovery and Welfare Analysis," IZA Discussion Papers 3062, Institute of Labor Economics (IZA).
    2. Alistair Munro, 2009. "Introduction to the Special Issue: Things We Do and Don’t Understand About the Household and the Environment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(1), pages 1-10, May.

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    More about this item

    Keywords

    Nash equilibrium; Intra-household allocation; Slutsky symmetry;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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