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An Equilibrium Framework for the Analysis of a Degrowth Society With Asymmetric Agents, Sharing and Basic Income

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  • Heikkinen, Tiina

Abstract

This paper presents a novel equilibrium framework, allowing for asymmetries in the initial wealth allocations, labour supplies as well as in the preferences of optimizing agents. The framework is applied to study a degrowth society where a subset of agents voluntarily limit their material consumption, thereby complying with voluntary simplicity (VS). At micro-level, the utility-maximization problems of asymmetric agents are formulated and solved for optimal labour supplies. New macro-level equilibrium solutions, accounting for wealth inequality, are presented based on different labour supply models. The equilibrium welfare is measured using a Bernoully-Nash aggregate. An increase in the share of the VS-type agents implies a degrowth transition to a lower level of average consumption. Analysis of the equilibrium framework shows that degrowth, whereby average market-based consumption falls, improves the equilibrium welfare, assuming the VS-type agents have sufficient resources, enabling a reduction in labour supplies. Sharing, collaborative consumption and basic income support welfare-increasing degrowth. Any growing economy can eventually reach the size at which degrowth would improve the welfare. Simulations suggest that degrowth can also yield a Pareto-improvement in welfare.

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  • Heikkinen, Tiina, 2018. "An Equilibrium Framework for the Analysis of a Degrowth Society With Asymmetric Agents, Sharing and Basic Income," Ecological Economics, Elsevier, vol. 148(C), pages 43-53.
  • Handle: RePEc:eee:ecolec:v:148:y:2018:i:c:p:43-53
    DOI: 10.1016/j.ecolecon.2018.02.007
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    References listed on IDEAS

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    2. Bilancini, Ennio & D'Alessandro, Simone, 2012. "Long-run welfare under externalities in consumption, leisure, and production: A case for happy degrowth vs. unhappy growth," Ecological Economics, Elsevier, vol. 84(C), pages 194-205.
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    4. Kallis, Giorgos, 2011. "In defence of degrowth," Ecological Economics, Elsevier, vol. 70(5), pages 873-880, March.
    5. Heikkinen, T., 2015. "(De)growth and welfare in an equilibrium model with heterogeneous consumers," Ecological Economics, Elsevier, vol. 116(C), pages 330-340.
    6. Victor, Peter A., 2012. "Growth, degrowth and climate change: A scenario analysis," Ecological Economics, Elsevier, vol. 84(C), pages 206-212.
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    Cited by:

    1. Sophia Seung-Yoon Lee & Ji-eun Lee & Kyo-seong Kim, 2020. "Evaluating Basic Income, Basic Service, and Basic Voucher for Social and Ecological Sustainability," Sustainability, MDPI, vol. 12(20), pages 1-25, October.

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