Endowment effect theory, public goods and welfare
According to endowment effect theory, the observed difference between the willingness to pay for a good and the willingness to accept retribution payments for giving up that good can be caused either by a disutility from parting or by an extra ownership utility. We analyze the welfare implications of these two alternatives with special emphasis on the case where they are good specific. Within a two-sector general-equilibrium model, we show that the ownership-utility effect may cause welfare losses: allocation inefficiencies are to be expected particularly with the provision of public goods.
Year of publication: |
2008
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Authors: | Bischoff, Ivo ; Meckl, Jürgen |
Published in: |
Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics). - Elsevier, ISSN 2214-8043. - Vol. 37.2008, 5, p. 1768-1774
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Publisher: |
Elsevier |
Keywords: | Endowment effect Public goods Economic welfare |
Saved in:
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