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

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  • Schlee, Edward E.

Abstract

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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  • Schlee, Edward E., 2013. "Radner’s cost–benefit analysis in the small: An equivalence result," Economics Letters, Elsevier, vol. 120(3), pages 570-572.
    • Handle: RePEc:eee:ecolet:v:120:y:2013:i:3:p:570-572
    DOI: 10.1016/j.econlet.2013.06.012
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    References listed on IDEAS

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    8. Edward E. Schlee, 2013. "Surplus Maximization and Optimality," American Economic Review, American Economic Association, vol. 103(6), pages 2585-2611, October.
    9. 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 1033-1038, May.
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    1. Schlee, Edward E., 2018. "Radner’s cost–benefit analysis in the small: A correction and new equivalences," Economics Letters, Elsevier, vol. 172(C), pages 31-33.

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    Keywords

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    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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