Demand properties in household Nash equilibrium

Abstract

Please Note: This paper was updated in July 2007 We study noncooperative household models with two agents and several voluntarily contributed public goods, deriving the counterpart to the Slutsky matrix and demonstrating the nature of the deviation of its properties from those of a true Slutsky matrix in the unitary model. We demonstrate the importance of distinguishing between cases in which there are and are not jointly contributed public goods and provide results characterising both cases. Demand properties are contrasted with those for collective models and conclusions drawn regarding the possibility of empirically testing the collective model against noncooperative alternatives.