The revealed preference approach to collective consumption behavior: Testing and sharing rule recovery

We present a revealed preference methodology for empirically analysing collective consumption behaviour. First, we introduce an integer programming (IP) methodology for testing data consistency with collective consumption models that account for publicly as well as privately consumed goods. This IP methodology can include information on “assignable quantities” for private goods. Next, we show that the IP methodology allows for recovering the personalized (Lindahl) prices for the public goods and the personalized quantities for the private goods. In turn, this implies recovery of the sharing rule (i.e. personalized income share levels). An empirical application demonstrates the practical usefulness of the methodology.

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