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The Welfare Significance and Nonsignificance of General Equilibrium Demand and Supply Curves

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  • Walter N. Thurman

    (North Carolina State University)

Abstract

General equilibrium demand and supply curves can be used to measure the multiple market effects of interventions m a single market. However, complications arise when feedback into the mtervened-m market comes through both demand and supply channels. This article presents a new and straightforward proof of the significance of general equilibrium curves when there is only one source of feedback, establishes the conditions under which multiple sources of feedback invalidate the analysis, and demonstrates that the general equilibrium curves become policy dependent when there are multiple sources of feedback.

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  • Walter N. Thurman, 1993. "The Welfare Significance and Nonsignificance of General Equilibrium Demand and Supply Curves," Public Finance Review, , vol. 21(4), pages 449-469, October.
  • Handle: RePEc:sae:pubfin:v:21:y:1993:i:4:p:449-469
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    1. Rucker, Randal R & Thurman, Walter N, 1990. "The Economic Effects of Supply Controls: The Simple Analytics of the U.S. Peanut Program," Journal of Law and Economics, University of Chicago Press, vol. 33(2), pages 483-515, October.
    2. Harberger, Arnold C, 1971. "Three Basic Postulates for Applied Welfare Economics: An Interpretive Essay," Journal of Economic Literature, American Economic Association, vol. 9(3), pages 785-797, September.
    3. Anderson, James E, 1976. "The Social Cost of Input Distortions: A Comment and a Generalization," American Economic Review, American Economic Association, vol. 66(1), pages 235-238, March.
    4. Carlton, Dennis W, 1979. "Valuing Market Benefits and Costs in Related Output and Input Markets," American Economic Review, American Economic Association, vol. 69(4), pages 688-696, September.
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