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Title: Non Cooperative Solutions with Consumption Externalities
Author: Randon, Emanuela
ISNI:       0000 0001 3507 6142
Awarding Body: University of York
Current Institution: University of York
Date of Award: 2004
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This thesis analyses non cooperative solutions with consumption e.xternalities in a partial equilibrium setting. Two non cooperative solutions are examined: the individual utility maximising response to the consumption choices of the other individuals (the Marshallian Nash equilibrium) and the individual expenditure minimiqing response· to the quantity consumed by the other agents (the compensated Nash equilibrium). Three chapters focus on the positive economics of the Marshallian Nash equilibrium with original theoretical and empirical insights. One chapter suggests policy corrections to have an optimal compensated Nash equilibrium. The effect ofconsumption externalities on the comparative. statics of a unique Marshallian Nash equilibrium is firstly examined. We analyse under which conditions the intensity of the externality changes the nature of the good. We find testable restrictions for this equilibrium solution under different assumptions on the number of individuals, number of externality inducing goods, functional forms of the externality effect. An empirical estimate of this non cooperative solution is then offered using consumer demand theory and a large data set (ten cross sections from the Family Expenditure Surveys (FES) 1991-2000). There is evidence of negative interdependent consumption externalities in household petrol budget shares. Next there is a more precise microfoundation of multiple equilibrium theory with consumption externalities. The slope and the curvature of the reaction function are linked to marginal utility properties. Vle find conditions that induce the individual to stay out of the market. The stability properties of corner solution Nash equilibria are analysed. We find counterintuitive examples on the comparative statics of these solutions. In the last original chapter, simple rules for an optimal tompensated Nash equilibria with no spillover externalities are considered. For tliis case, Lindahl prices are required. We show the condit~ ons under which piecemeal policies are possible. Testable restrictions for this compensated Nash equilibrium conclude the thesis.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available