Consumption, Status and Redistribution

Research output: Working paperDiscussion paper

Abstract

This paper considers the effect of inequality when there are concerns for status. We analyse the effects of linear redistributive taxes in an economy where agentsâ?? utility depends both on consumption and on their rank in the distribution of consumption of a positional good. This increase in equality increases the degree of social competition. The equilibrium level of expenditure on the positional good rises for most agents with the possible exception of some with above average income. Equilibrium utility falls for those with average and above income, while the utility of the poor may (or may not) rise.

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Original languageEnglish
PublisherUCLA Department of Economics
Publication statusPublished - 2004

Publication series

NameLevine's Bibliography

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