Economic Theory

, Volume 54, Issue 3, pp 485–500

Private versus public consumption within groups: testing the nature of goods from aggregate data

Research Article

DOI: 10.1007/s00199-012-0729-8

Cite this article as:
Cherchye, L., De Rock, B. & Platino, V. Econ Theory (2013) 54: 485. doi:10.1007/s00199-012-0729-8

Abstract

We study the testability implications of public versus private consumption in collective models of group consumption. The distinguishing feature of our approach is that we start from a revealed preference characterization of collectively rational behavior. Remarkably, we find that assumptions regarding the public or private nature of specific goods do have testability implications, even if one only observes the aggregate group consumption. In fact, these testability implications apply as soon as the analysis includes three goods and four observations. This stands in sharp contrast with existing results that start from a differential characterization of collectively rational behavior.

Keywords

Multi-person group consumption Collective model Revealed preferences Public goods Private goods Consumption externalities 

JEL Classification

D11 D12 D13 C14 

Copyright information

© Springer-Verlag Berlin Heidelberg 2012

Authors and Affiliations

  • Laurens Cherchye
    • 1
  • Bram De Rock
    • 2
  • Vincenzo Platino
    • 3
  1. 1.Center for Economic StudiesUniversity of LeuvenKortrijkBelgium
  2. 2.ECARES and ECOREUniversité Libre de BruxellesBrusselsBelgium
  3. 3.Centre d’Economie de la SorbonneParis School of Economics–Université Paris 1 Panthéon–SorbonneParis Cedex 13France

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