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Demand for Durable and Nondurable Goods, Environmental Policy and Consumer Welfare

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Author Info
Conrad, K
Schroder, M
Abstract

If a tax on energy affects the demand for a nondurable good, the stock of a durable good, and the proportion of the energy consumption per unit of service of the durable good, an integrated approach for investigating consumer demand for durables and nondurables is required. The purpose of this paper is to employ the concept of a variable expenditure function with quasi-fixed durable goods as arguments in order to derive a demand system for nondurable goods in prices of the nondurables, in the stocks of durables, and in variable expenditure. From the envelope condition desired stocks of durables can be calculated and investment demand for durables can be determined. For an application the authors choose a variable expenditure function based on the almost ideal demand specification, and evaluate alternative environmental policy measures using the equivalent variation for comparing the welfare effects. Copyright 1991 by John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 6 (1991)
Issue (Month): 3 (July-Sept.)
Pages: 271-86
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Handle: RePEc:jae:japmet:v:6:y:1991:i:3:p:271-86

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  1. Kurt Kratena & Michael Wüger, 2008. "Combining a Demand System with the Household Production Approach. Modelling Energy Demand in Selected European Countries," WIFO Working Papers 311, WIFO. [Downloadable!]
  2. Inge Mayeres, . "The Distributional Impacts of Policies for the Control of Transport Externalities.An Applied General Equilibrium Model," Working Papers 1999.8, Fondazione Eni Enrico Mattei. [Downloadable!]
  3. Isamu Matsukawa, 2005. "The Benefits of Information on the Efficient Usage of Consumer Durables," Others 0501005, EconWPA. [Downloadable!]
  4. Erno Zalai, 1998. "Computable Equilibrium Modelling and Application to Economies in Transition," CERT Discussion Papers 9804, Centre for Economic Reform and Transformation, Heriot Watt University. [Downloadable!]
  5. Klaus Conrad & Andreas Löschel, 2005. "Recycling of eco-taxes, labor market Effects and the true cost of labor - A CGE analysis," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 259-278, November. [Downloadable!]
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