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Regulating the Environmental Consequences of Preferences for Social Status within an Evolutionary Framework

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  • Sartzetakis, Eftichios S.
  • Xepapadeas, Anastasios
  • Yannacopoulos, Athanasios

Abstract

Taking as given that we are consuming too much and that overconsumption leads to environmental degradation, the present paper examines the regulator's choices between informative advertisement and consumption taxation. We model overconsumption by considering individuals that care about social status apart from the intrinsic utility, derived from direct consumption. We assume that there also exist individuals that care only about their own private consumption and we examine the evolution of preferences through time by allowing individuals to alter their behavior as a result of a learning process, akin to a replicator dynamics type. We consider the regulator's choice of consumption taxation and informative advertisement both in an arbitrary and an optimal control context. In the arbitrary overconsumption control context we find that the regulator could decrease, or even eliminate, the share of status seekers in the population. In the context of optimal overconsumption control, we show that the highest welfare is attained when status seekers are completely eliminated, while the lowest in the case that the entire population consists of status seekers.

Suggested Citation

  • Sartzetakis, Eftichios S. & Xepapadeas, Anastasios & Yannacopoulos, Athanasios, 2015. "Regulating the Environmental Consequences of Preferences for Social Status within an Evolutionary Framework," Climate Change and Sustainable Development 202440, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcl:202440
    DOI: 10.22004/ag.econ.202440
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    References listed on IDEAS

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    Cited by:

    1. Roman Inderst & Eftichios Sartzetakis & Anastasios Xepapadeas, 2021. "Technical Report on Sustainability and Competition," DEOS Working Papers 2103, Athens University of Economics and Business.

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    More about this item

    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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