Welfare Impact of Information with Experiments: The Crucial Role of the Price Elasticity of Demand
AbstractThis paper focuses on the welfare effects of information computed from experimental methods eliciting willingness-to-pay. First, a theoretical model shows that the size of the welfare variation is related to the elasticity of the demand under the absence of information about a characteristic. Second, our estimates indicate that consumer demand from a laboratory auction is more price-elastic than time-series demand for similar products. As a result, the welfare change directly derived from individual willingness-to-pay is overestimated compared to the welfare change linked to an approach combining time-series demand with the mean willingness-to-pay premium.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 30 (2010)
Issue (Month): 2 ()
Contact details of provider:
Experiment; Welfare; Consumers; Information; Demand;
Find related papers by JEL classification:
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
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