The optimal provision of a state-variable public good, where the global climate is the prime example, is analyzed in a model where people care about their relative consumption. We consider both keeping-up-with-the-Joneses preferences (where people compare their own current consumption with...

type="main" xml:id="ecca12058-abs-0001" <p>This paper derives Pareto-efficient provision rules for national and global public goods in a two-country world, where each individual cares about his or her relative consumption of private goods compared to other domestic and foreign residents. We...</p>

Several previous studies have demonstrated the importance of relative consumption comparisons for public policy. Yet, almost all of them have ignored the role of leisure for status comparisons. Inspired by Veblen (The theory of the leisure class. Macmillan, New York, <CitationRef CitationID="CR51">1899</CitationRef>), this paper assumes...</citationref>

This paper concerns optimal redistributive non-linear income taxation in an OLG model, where people care about their own consumption relative to (i) other people's current consumption, (ii) own past consumption, and (iii) other people's past consumption. We show that both (i) and (iii) affect...

This paper considers a model with nonlinear income taxation and public good provision when people care about their relative consumption compared to others. The standard optimality expressions are modified by terms that reflect the extent to which people care about relative consumption. The...