Consumption Externalities, Rental Markets and Purchase Clubs

  • Suzanne Scotchmer
Part of the Studies in Economic Theory book series (ECON.THEORY, volume 25)


A premise of general equilibrium theory is that private goods are rival. Nevertheless, many private goods are shared, e.g., through borrowing, through co-ownership, or simply because one person’s consumption affects another person’s wellbeing. I analyze consumption externalities from the perspective of club theory, and argue that, provided consumption externalities are limited in scope, they can be internalized through membership fees to groups. Two important applications are to rental markets and “purchase clubs,” in which members share the goods that they have individually purchased.

Key words

Consumption externalities Clubs Purchase clubs Rental markets 


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Copyright information

© Springer-Verlag Berlin Heidelberg 2006

Authors and Affiliations

  • Suzanne Scotchmer
    • 1
  1. 1.Department of Economics and GSPPUniversity of CaliforniaBerkeleyUSA

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