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 agents’
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
Original languageEnglish
PublisherEdinburgh School of Economics Discussion Paper Series
Number of pages15
Publication statusPublished - Nov 2004

Publication series

NameESE Discussion Papers
No.127

Keywords

  • status
  • relative standing
  • income inequality
  • consumption externalities
  • C72
  • D11
  • D31
  • D62

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