We consider competitive markets for multiple commodities with endogenous formation of one- or two-person households. Within each two-person household, externalities from the partner's commodity consumption and unpriced actions are allowed. Each individual has two types of traits: observable...

We consider competitive markets for multiple commodities with endogenous formation of one- or two-person households. Within each two-person household, externalities from the partner’s commodity consumption and unpriced actions are allowed. Each individual has two types of traits: observable...

Housing developments (condos and suburban developments) are not necessarily homogeneous. Developers provide different types of units with various sizes and other characteristics catering to different types of customers. In this paper, we allow local consumption externalities within each...

One-sector neoclassical growth models reveal that consumption externalities lead to inefficient allocation in a steady state and indeterminate equilibrium toward the steady state only if there is a labor-leisure tradeoff. This paper shows that in a two-sector neoclassical growth model, even...

In one-sector neoclassical growth models, consumption externalities lead to an inefficient allocation in a steady state and indeterminate equilibrium toward a steady state only if there is a labor-leisure tradeoff. This paper shows that in a two-sector neoclassical growth model, even without a...

Housing developments (condos and suburban developments) are not necessarily homogeneous. Developers provide different types of units of various sizes and other characteristics catering to different types of customers. In this paper, we allow joint production and local consumption externalities...

We estimate the importance of preference interdependence from consumption choices. Our strategy follows the literature that tests the constraints imposed by optimality in the evolution of individual consumption. We derive an Euler equation from a preference specification that allows for...

In this paper we analyze theoretically and empirically the impact of an increase in income inequality on the current account balance. We develop a model with consumption externalities and heterogeneous agents which explains how an increase in income inequality can affect negatively or positively...

This article investigates the effects of trade liberalization on transboundary pollution associated with consumption and global welfare in a reciprocal-markets model. We find that a bilateral reduction in tariffs is beneficial to the global environment. Moreover, trade liberalization will...

This paper studies advertising in vertically differentiated product markets with positive consumption externalities. In markets with consumption externalities, the value of the product to the consumer depends on the purchasing decisions of other consumers. In such markets, we show that firms...