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Consumption Externalities, Rental Markets and Purchase Clubs

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  • Suzanne Scotchmer

    (University of California, Berkeley)

Abstract

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

Suggested Citation

  • Suzanne Scotchmer, 2002. "Consumption Externalities, Rental Markets and Purchase Clubs," Discussion Papers 03-25, University of Copenhagen. Department of Economics, revised May 2003.
  • Handle: RePEc:kud:kuiedp:0325
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    File URL: http://www.econ.ku.dk/english/research/publications/wp/2003/0325.pdf/
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    References listed on IDEAS

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    1. Bakos, Yannis & Brynjolfsson, Erik & Lichtman, Douglas, 1999. "Shared Information Goods," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 117-155, April.
    2. Yannis Bakos & Erik Brynjolfsson, 1999. "Bundling Information Goods: Pricing, Profits, and Efficiency," Management Science, INFORMS, vol. 45(12), pages 1613-1630, December.
    3. Hans Gersbach & Hans Haller, 2001. "Collective Decisions and Competitive Markets," Review of Economic Studies, Oxford University Press, vol. 68(2), pages 347-368.
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    Cited by:

    1. Gersbach, Hans & Haller, Hans, 2010. "Club theory and household formation," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 715-724, September.
    2. Hal R. Varian, 2005. "Copying and Copyright," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 121-138, Spring.
    3. Yooki Park & Suzanne Scotchmer, 2004. "Digital Rights Management and the Pricing of Digital Products," Working Papers 04-09, NET Institute, revised Oct 2004.
    4. Emilson Caputo Delfino Silva & Richard Corne, 2014. "Prestige Clubs," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 131, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].

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