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The Distributional Welfare Effects of Rising Prices in the United States: The 1970's Experience


  • Stoker, Thomas M


This paper presents estimates of the distributional welfare impacts ofthe actual price rises of energy and nonenergy commodities during the1970-80 decade in the United States. Measures of welfare changes basedon net compensating variations are computed for families that differ with respect to demographic characteristics, initial total expenditurelevels, and total expenditure growth profiles over the decade. For comparison, measures of welfare change based solely on the changes inenergy prices are computed. The author shows that welfare differencesdue to initial expenditure levels or demographic profiles are minor incomparison to welfare differences due to different expenditure growthprofiles. Copyright 1986 by American Economic Association.

Suggested Citation

  • Stoker, Thomas M, 1986. "The Distributional Welfare Effects of Rising Prices in the United States: The 1970's Experience," American Economic Review, American Economic Association, vol. 76(3), pages 335-349, June.
  • Handle: RePEc:aea:aecrev:v:76:y:1986:i:3:p:335-49

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    References listed on IDEAS

    1. Clarke, Darral G & Dolan, Robert J, 1984. "A Simulation Analysis of Alternative Pricing Strategies for Dynamic Environments," The Journal of Business, University of Chicago Press, vol. 57(1), pages 179-200, January.
    2. Sanford J. Grossman & Richard E. Kihlstrom & Leonard J. Mirman, 1977. "A Bayesian Approach to the Production of Information and Learning By Doing," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 533-547.
    3. Robert B. Wilson, 1967. "Competitive Bidding with Asymmetric Information," Management Science, INFORMS, vol. 13(11), pages 816-820, July.
    4. Milgrom, Paul & Roberts, John, 1986. "Price and Advertising Signals of Product Quality," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 796-821, August.
    5. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
    6. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    7. Nancy L. Stokey, 1981. "Rational Expectations and Durable Goods Pricing," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 112-128, Spring.
    8. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    9. Harris, Milton & Raviv, Artur, 1981. "A Theory of Monopoly Pricing Schemes with Demand Uncertainty," American Economic Review, American Economic Association, vol. 71(3), pages 347-365, June.
    10. A. M. Spence, 1981. "The Learning Curve and Competition," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 49-70, Spring.
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