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A Diagrammatic Exposition of Weak Complementarity and the Willig Condition

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  • V. Kerry Smith
  • H. Spencer Banzhaf

Abstract

This article provides a graphical explanation for one of the most important restrictions to utility functions used in revealed preference approaches for measuring the demand for public goods and product quality—weak complementarity. It also describes how the Willig condition is an important element along with weak complementarity in measuring Hicksian consumer surplus for changes in public goods or quality using Marshallian demand curves. Copyright 2004, Oxford University Press.

Suggested Citation

  • V. Kerry Smith & H. Spencer Banzhaf, 2004. "A Diagrammatic Exposition of Weak Complementarity and the Willig Condition," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 455-466.
  • Handle: RePEc:oup:ajagec:v:86:y:2004:i:2:p:455-466
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    File URL: http://hdl.handle.net/10.1111/j.0092-5853.2004.00591.x
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    Cited by:

    1. Larson, Douglas M. & Piennar, Elizabeth, 2004. "Time, Weak Complementarity, and Nonuse Value," 2004 Annual meeting, August 1-4, Denver, CO 271500, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. V. Smith & Subhrendu Pattanayak, 2002. "Is Meta-Analysis a Noah's Ark for Non-Market Valuation?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(1), pages 271-296, June.
    3. Spencer Banzhaf, H., 2005. "Green price indices," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 262-280, March.
    4. Nicolai V. Kuminoff & V. Kerry Smith & Christopher Timmins, 2010. "The New Economics of Equilibrium Sorting and its Transformational Role for Policy Evaluation," NBER Working Papers 16349, National Bureau of Economic Research, Inc.
    5. David G. Brown, 2008. "Falsifying the “Goodness” of Nonmarket Goods with Revealed Preference," Departmental Working Papers 2008-08, Department of Economics, Louisiana State University.
    6. V. Smith & Mary Evans & H. Banzhaf & Christine Poulos, 2010. "Can Weak Substitution be Rehabilitated?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(2), pages 203-221, February.
    7. Smith, V. Kerry & Banzhaf, H. Spencer & Walsh, Randy, 2002. "General Equilibrium Benefit Transfers for Spatial Externalities: Revisiting EPA's Prospective Analysis," Discussion Papers dp-02-44, Resources For the Future.
    8. David G. Brown, 2008. "A Preference-Theoretic Methodology for Nonmarket Goods," Departmental Working Papers 2008-07, Department of Economics, Louisiana State University.
    9. Revesz, Richard & Stavins, Robert, 2004. "Environmental Law and Policy," Working Paper Series rwp04-023, Harvard University, John F. Kennedy School of Government.
    10. Bockstael, Nancy E. & Freeman III, A. Myrick, 2006. "Welfare Theory and Valuation," Handbook of Environmental Economics,in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 12, pages 517-570 Elsevier.
    11. V. Smith & George Van Houtven, 2004. "Recovering Hicksian Consumer Surplus within a Collective Model: Hausman's Method for the Household," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 28(2), pages 153-167, June.
    12. Palmquist, Raymond B., 2005. "Weak complementarity, path independence, and the intuition of the Willig condition," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 103-115, January.
    13. Smith, V. Kerry & Banzhaf, H. Spencer, 2007. "Quality adjusted price indexes and the Willig condition," Economics Letters, Elsevier, vol. 94(1), pages 43-48, January.
    14. Evans, Keith Shannon, 2011. "Problems of uncertainty, learning, and welfare measurement in resource and environmental economics," ISU General Staff Papers 201101010800001072, Iowa State University, Department of Economics.
    15. Kuminoff, Nicolai V., 2008. "Recovering Preferences from a Dual-Market Locational Equilibrium," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 5989, Australian Agricultural and Resource Economics Society.
    16. Phaneuf, Daniel J. & Smith, V. Kerry, 2006. "Recreation Demand Models," Handbook of Environmental Economics,in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 15, pages 671-761 Elsevier.
    17. David G. Brown, 2008. "Preference-Theoretic Weak Complementarity: Getting More with Less," Departmental Working Papers 2008-09, Department of Economics, Louisiana State University.
    18. von Haefen, Roger H., 2007. "Empirical strategies for incorporating weak complementarity into consumer demand models," Journal of Environmental Economics and Management, Elsevier, vol. 54(1), pages 15-31, July.

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