IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp3656.html
   My bibliography  Save this paper

Social Interactions in Demand

Author

Listed:
  • Grodner, Andrew

    (East Carolina University)

  • Kniesner, Thomas J.

    (Claremont Graduate University)

Abstract

We examine theoretically demand in a two-good economy where the demand of one good is influenced by either a spillover effect in the form of an externality from other consumers’ choices and or a conformity effect representing a need for making similar choices as others. A positive spillover effect increases the demand for the good with interactions, and a conformity effect makes the demand curve pivot around the average market demand to make demand less price sensitive. The collateral implication is that spillover in consumption increases the associated derived demand for labor and conformity in consumption makes the associated derived demand for labor less elastic. Finally, we also demonstrate how the presence of a good with social interactions affects the demand for the good without social interactions and the associated demand for the labor producing the non-interactions good.

Suggested Citation

  • Grodner, Andrew & Kniesner, Thomas J., 2008. "Social Interactions in Demand," IZA Discussion Papers 3656, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3656
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp3656.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Andrew Grodner & Thomas J. Kniesner, 2006. "Social Interactions in Labor Supply," Journal of the European Economic Association, MIT Press, vol. 4(6), pages 1226-1248, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Julie Beugnot & Bernard Fortin & Guy Lacroix & Marie Claire Villeval, 2013. "Social Networks and Peer Effects at Work," Cahiers de recherche 1320, CIRPEE.
    2. Grodner, Andrew & Kniesner, Thomas J. & Bishop, John A., 2011. "Social Interactions in the Labor Market," Foundations and Trends(R) in Microeconomics, now publishers, vol. 6(4), pages 265-366, September.
    3. Laszlo Goerke & Michael Neugart, 2021. "Social preferences, monopsony and government intervention," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(2), pages 864-891, May.
    4. Ariel H. Fambeu, 2019. "Peer Effect and Environmental Responsibility of Enterprises in a Sub-Saharan African Country," Economics Bulletin, AccessEcon, vol. 39(2), pages 1084-1094.
    5. Beugnot, Julie & Fortin, Bernard & Lacroix, Guy & Villeval, Marie Claire, 2019. "Gender and peer effects on performance in social networks," European Economic Review, Elsevier, vol. 113(C), pages 207-224.
    6. Thomas J. Kniesner, 2019. "Behavioral economics and the value of a statistical life," Journal of Risk and Uncertainty, Springer, vol. 58(2), pages 207-217, June.
    7. Ángel L. Martín‐Román & Jaime Cuéllar‐Martín & Alfonso Moral, 2020. "Labor supply and the business cycle: The “bandwagon worker effect”," Papers in Regional Science, Wiley Blackwell, vol. 99(6), pages 1607-1642, December.
    8. Grajzl, Peter & Baniak, Andrzej, 2012. "Mandating behavioral conformity in social groups with conformist members," Journal of Economic Behavior & Organization, Elsevier, vol. 82(2), pages 479-493.
    9. Altundere, Merve Büşra, 2014. "The Relationship Between Sociability and Household Debt," MPRA Paper 90617, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Collewet, M.M.F. & de Grip, A. & Koning, J.d., 2015. "Peer working time, labour supply, and happiness for male workers," ROA Research Memorandum 006, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    2. Joan Costa-Font & Mireia Jofre-Bonet, 2013. "Anorexia, Body Image and Peer Effects: Evidence from a Sample of European Women," Economica, London School of Economics and Political Science, vol. 80(317), pages 44-64, January.
    3. Cécile Aubert & Huihui Ding, 2022. "Voter conformism and inefficient policies," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 59(1), pages 207-249, July.
    4. Collewet, Marion & de Grip, Andries & de Koning, Jaap, 2017. "Conspicuous work: Peer working time, labour supply, and happiness," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 68(C), pages 79-90.
    5. Giacomo De Giorgi & Anders Frederiksen & Luigi Pistaferri, 2020. "Consumption Network Effects," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 87(1), pages 130-163.
    6. Michael A. Clemens, 2022. "The effect of seasonal work visas on native employment: Evidence from US farm work in the Great Recession," Review of International Economics, Wiley Blackwell, vol. 30(5), pages 1348-1374, November.
    7. Eric Maurin & Julie Moschion, 2009. "The Social Multiplier and Labor Market Participation of Mothers," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 251-272, January.
    8. Grajzl, Peter & Baniak, Andrzej, 2012. "Mandating behavioral conformity in social groups with conformist members," Journal of Economic Behavior & Organization, Elsevier, vol. 82(2), pages 479-493.
    9. Hansen, Jørgen Drud & Molana, Hassan & Montagna, Catia & Nielsen, Jørgen Ulff-Møller, 2012. "Work hours, social value of leisure and globalisation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(3), pages 317-326.
    10. Ángel L. Martín‐Román & Jaime Cuéllar‐Martín & Alfonso Moral, 2020. "Labor supply and the business cycle: The “bandwagon worker effect”," Papers in Regional Science, Wiley Blackwell, vol. 99(6), pages 1607-1642, December.
    11. John S. Earle & Klara Sabirianova Peter, 2006. "Complementarity and Custom in Contract Violation," Upjohn Working Papers 06-129, W.E. Upjohn Institute for Employment Research.
    12. Collewet, Marion & de Grip, Andries & de Koning, Jaap, 2015. "Conspicuous Work: Peer Working Time, Labour Supply and Happiness for Male Workers," IZA Discussion Papers 9011, Institute of Labor Economics (IZA).
    13. Andrew Grodner & Thomas J. Kniesner, 2008. "Labor supply with social interactions: econometric estimates and their tax policy implications," Research in Labor Economics, in: Work, Earnings and Other Aspects of the Employment Relation, pages 1-23, Emerald Group Publishing Limited.
    14. Goodpaster Natalie K, 2010. "Leaves and Leaving: The Family and Medical Leave Act and the Decline in Maternal Labor Force Participation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-38, January.
    15. Clemens, Michael A., 2017. "The Effect of Occupational Visas on Native Employment: Evidence from Labor Supply to Farm Jobs in the Great Recession," IZA Discussion Papers 10492, Institute of Labor Economics (IZA).
    16. Aronsson, Thomas & Granlund, David, 2015. "Gender norms, work hours, and corrective taxation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 56(C), pages 33-39.
    17. ÖZGÜR, Onur & BISIN, Alberto, 2011. "Dynamic Linear Economies with Social Interactions," Cahiers de recherche 04-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    18. Oztek, Abdullah Selim, 2013. "Externalities and Optimal Taxation: A Progressive Tax Case," MPRA Paper 104847, University Library of Munich, Germany, revised Sep 2013.
    19. Bruce A. Weinberg, 2007. "Social Interactions with Endogenous Associations," NBER Working Papers 13038, National Bureau of Economic Research, Inc.
    20. Xu Lin, 2010. "Identifying Peer Effects in Student Academic Achievement by Spatial Autoregressive Models with Group Unobservables," Journal of Labor Economics, University of Chicago Press, vol. 28(4), pages 825-860, October.

    More about this item

    Keywords

    spillover; social interactions; consumer demand; conformity; labor demand;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp3656. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.