We develop a model with intra-generational consumption externalities, based on the overlapping generation model by Diamond (1965). More specifically, we consider a two-period lived overlapping generation economy, assuming that the utility of each consumer depends also on the average consumption level by the consumers in the same generation. We suppose that such level is not taken as a parameter by agents, who behave strategically. We characterize the consumption and saving choices for the two periods in the Nash equilibrium path and we determine a dynamic equation for capital accumulation. For the associated dynamical system, we find a unique positive steady state for capital and we investigate how its position, as well as that of the steady states for consumption in both periods, change with respect to variations in the degree of interaction in the two periods. We finally compare the steady states for capital with and without social interaction.

Naimzada, A., Pireddu, M. (2016). A positional game for an overlapping generation economy. JOURNAL OF DIFFERENCE EQUATIONS AND APPLICATIONS, 22(8), 1156-1166 [10.1080/10236198.2016.1179292].

A positional game for an overlapping generation economy

Naimzada, AK;Pireddu M
2016

Abstract

We develop a model with intra-generational consumption externalities, based on the overlapping generation model by Diamond (1965). More specifically, we consider a two-period lived overlapping generation economy, assuming that the utility of each consumer depends also on the average consumption level by the consumers in the same generation. We suppose that such level is not taken as a parameter by agents, who behave strategically. We characterize the consumption and saving choices for the two periods in the Nash equilibrium path and we determine a dynamic equation for capital accumulation. For the associated dynamical system, we find a unique positive steady state for capital and we investigate how its position, as well as that of the steady states for consumption in both periods, change with respect to variations in the degree of interaction in the two periods. We finally compare the steady states for capital with and without social interaction.
Articolo in rivista - Articolo scientifico
comparative statics; consumption externalities; overlapping generations; Positional game; stability;
Positional game, overlapping generations, consumption externalities, stability, comparative statics
English
2016
2016
22
8
1156
1166
open
Naimzada, A., Pireddu, M. (2016). A positional game for an overlapping generation economy. JOURNAL OF DIFFERENCE EQUATIONS AND APPLICATIONS, 22(8), 1156-1166 [10.1080/10236198.2016.1179292].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/110649
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