| This dissertation comprises two chapters. Chapter 1 introduces the concept of the group good---a good whose level of provision does not affect the size of a voluntary group of individuals who share its financing, ownership, and consumption---understanding of which is a sizable step toward a more systematic and complete understanding of the nature of the entire spectrum of consumption possibilities. The concept of group goods captures the essence of an important class of consumption possibilities that the established classes of goods (private goods, club goods, common-property resources, and public goods) does not completely describe and explain. Formal modeling of markets for group goods yields intriguing patterns of consumption, demand, and welfare that are consequential for policymaking. For example, policies that seek to increase the size of consumer groups may achieve both gains in economic welfare and lower equilibrium quantities of group goods. Consequent reductions in carbon emissions associated with lower industrial output levels may result in improved environmental conditions and help attain a broader social goal of sustainability. Chapter 2 demonstrates that in contingent valuation (CV) surveys the difference between stated and actual values is conditional upon the choice of an elicitation format due to possible interaction of multiple effects. More specifically, I look at the interaction of the social isolation and free riding effects within two elicitation formats---the voting referendum elicitation format (the VREF) and the dichotomous choice elicitation format (the DCEF). I find that as the majority decision binds within the VREF, non-decisive voters have a dominant strategy to donate in the absence of social isolation, which is not the case within the DCEF. In fact, the absence of social isolation can be a desirable feature in the context of the DCEF, because it mitigates the free riding problem and makes the DCEF a more reliable elicitation format, when compared to the VREF. These findings also suggest that the social isolation effect, rather than being a major, ubiquitous, and unavoidable problem for the CV methodology, is merely a parochial feature of the VREF. |
