Club Theory and Household Formation

Abstract

The relationship between our general equilibrium model with multi-member households and club models with multiple private goods is investigated. The main distinction in the definitions consists of the equilibrium concepts. As a rule, competitive equilibria among households where no group of consumers can benefit from forming a newhousehold and valuation equilibria prove equivalent in the absence of consumption externalities, but not in their presence.

Keywords: Household Behavior, Household Formation, General Equilibrium, Clubs

JEL Classification: D13, D50, D62, D71