Household behavior and individual autonomy: an extended Lindahl mechanism

We present a comprehensive model of household economic decision covering both full cooperation and noncooperation as well as semi-cooperative cases, varying with income distribution and a parameter vector θ representing degrees of individual autonomy with respect to the public goods. In this model, the concept of "household θ-equilibrium" is introduced through the reformulation of the Lindahl equilibrium for Nash implementation and its extension to semi-cooperation. Existence is proved and some generic properties derived. An example is given to illustrate. An important benefit of this approach is to allow for a compact and unified investigation of the testable (local) restrictions of household demand. A particular decomposition of the pseudo-Slutsky matrix is derived and the testability of the various models discussed.