Mean consumption representation of consumption externalities

✍ Scribed by Mitsunori Noguchi

• Book ID: 104045737
• Publisher: Elsevier Science
• Year: 2006
• Tongue: English
• Weight: 139 KB
• Volume: 51
• Category: Article
• ISSN: 0165-4896
• DOI: 10.1016/j.mathsocsci.2006.02.001

✦ Synopsis

The author previously investigated exchange economies with a price-dependent reference coalition externality which can be represented as a mean consumption bundle of a reference coalition C [Noguchi, M., 2005. Interdependent preferences with a continuum of agents. Journal of Mathematical Economics 41, 665-686]. In the present paper, we justify, under a suitable generalization of the notion of negatively interdependent preferences [Ok, E.A., Koc ¸kesen, L., 2000. Negatively interdependent preferences. Social Choice and Welfare 17, 533-558], that consumers act as if they compute the mean consumption bundle R C xdl C of C and maximize an appropriate utility function V whose consumption externality depends only on R C xdl C . The strong law of large numbers plays a crucial role in our arguments.