History and troubles of consumer surplus
The paper is focused on history of the concept of consumer surplus presented by Alfred Marshall as an economic tool to measure benefits and losses resulting from changes in market conditions. As it assumes constant marginal utility of money, it was refused by further development of economics. Subsequently, John Hicks redefined the concept using indifference analysis, inducing the use of compensating and equivalent variations in welfare economics. However, we reveal substantial errors in the Kaldor-Hicks-efficiency justification of economic policy and suggest an alternative use for the concept of consumer surplus - in an analysis of economic discrimination.
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Volume (Year): 2008 (2008)
Issue (Month): 3 ()
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hausman, Jerry A, 1981. "Exact Consumer's Surplus and Deadweight Loss," American Economic Review, American Economic Association, vol. 71(4), pages 662-76, September.
- Haveman, Robert H & Gabay, Mary & Andreoni, James R, 1987. "Exact Consumer's Surplus and Deadweight Loss: A Correction," American Economic Review, American Economic Association, vol. 77(3), pages 494-95, June.
- Irvine, I.J. & Sims, W.A., 1995.
"Measuring Consumer Surplus with Unknown Hicksian Demands,"
219, University of Sydney, School of Economics.
- Irvine, Ian J & Sims, William A, 1998. "Measuring Consumer Surplus with Unknown Hicksian Demands," American Economic Review, American Economic Association, vol. 88(1), pages 314-22, March.
- Robert L. Bishop, 1946. "Professor Knight and the Theory of Demand," Journal of Political Economy, University of Chicago Press, vol. 54, pages 141.
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