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| Tekijä: | Frank, R. H. |
| Otsikko: | Should public policy respond to positional externalities |
| Lehti: | Journal of Public Economics
2008 : AUG-SEP, VOL 92 p. 1777-1786 |
| Asiasana: | incomes externalities consumption taxation |
| Vapaa asiasana: | happiness |
| Kieli: | eng |
| Tiivistelmä: | The study examines a positional good and how its utility depends strongly on how it compares with others in the same category. Specifically the study concentrates on harms caused by positional externalities and whether harms should be mitigated by legislation. The findings suggest reveal that from any individual job seeker's point of view, the best response might be to match the higher expenditures of others, lest her chances of landing the job fall, even though this outcome may be inefficient since when all spend more, each candidate's probability of success remains unchanged. To solve the problem the most efficient result would be to have the progressive consumption tax. Increasing the progressivity relative to current structure would change expenditure patterns in ways that would result in greater well-being for consumers across entire income scale. |
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