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Radner’s cost–benefit analysis in the small: An equivalence result

  • Schlee, Edward E.

I show that local changes in five welfare measures are equal: a measure proposed by Radner (1993); consumers’ surplus; the Slutsky change in real wealth; the Divisia quantity index, and Debreu’s (1951) coefficient of resource utilization (the last two rescaled in units of a numeraire good).

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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 120 (2013)
Issue (Month): 3 ()
Pages: 570-572

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Handle: RePEc:eee:ecolet:v:120:y:2013:i:3:p:570-572
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  1. Willig, Robert D, 1976. "Consumer's Surplus without Apology," American Economic Review, American Economic Association, vol. 66(4), pages 589-97, September.
  2. Silberberg, Eugene, 1972. "Duality and the Many Consumer's Surpluses," American Economic Review, American Economic Association, vol. 62(5), pages 942-52, December.
  3. Mas-Colell,Andreu, 1985. "The Theory of General Economic Equilibrium," Cambridge Books, Cambridge University Press, number 9780521265140.
  4. Hammond,Peter, 1988. "Theoretical progress in public economics: A provocative assessment," Discussion Paper Serie A 171, University of Bonn, Germany.
  5. Debreu, Gerard, 1972. "Smooth Preferences," Econometrica, Econometric Society, vol. 40(4), pages 603-15, July.
  6. DEBREU, Gérard, . "Economies with a finite set of equilibria," CORE Discussion Papers RP 67, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Bruce, Neil, 1977. "A Note on Consumer's Surplus, the Divisia Index, and the Measurement of Welfare Changes," Econometrica, Econometric Society, vol. 45(4), pages 1033-38, May.
  8. Edward E. Schlee, 2013. "Surplus Maximization and Optimality," American Economic Review, American Economic Association, vol. 103(6), pages 2585-2611, October.
  9. Arrow, Kenneth J & Lind, Robert C, 1970. "Uncertainty and the Evaluation of Public Investment Decisions," American Economic Review, American Economic Association, vol. 60(3), pages 364-78, June.
  10. Blackorby, Charles, 1999. " Partial-Equilibrium Welfare Analysis," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(3), pages 359-74.
  11. Diewert, W E, 1981. "The Measurement of Deadweight Loss Revisited," Econometrica, Econometric Society, vol. 49(5), pages 1225-44, September.
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