Welfare from a benefit viewpoint (*)
Individual welfare is most naturally measured in terms of individual utility but this has the well-known disadvantage that utility levels of different consumers cannot be meaningfully compared. This difficulty is traditionally avoided by using various willingness-to-pay measures, such as compensating and equivalent variation. These measures are based on price changes. This paper develops alternative welfare measures using willingness-to-trade concepts as originally proposed by Dupuit (1844). These measures are based directly on commodity bundle changes. These welfare measures can be represented as integrals under certain inverse demand functions. An important property of the proposed welfare measures studied here is that they can be meaningfully aggregated to form overall welfare measures. These measures in turn directly quantify a compensation criterion. It is shown that competitive prices provide a first-order approximation to the welfare measures. Furthermore a second-order approximation can be found by forming a suitable aggregation of the individual second-order effects. Finally, it is shown that the representations for consumer welfare as integrals under inverse demand curves can be extended to the aggregate measures as well. This then provides a complete complement to traditional measures based on price changes.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 7 (1996)
Issue (Month): 3 ()
|Note:||Received: June 3, 1993; revised version March 3, 1995|
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/economics/economic+theory/journal/199/PS2|
When requesting a correction, please mention this item's handle: RePEc:spr:joecth:v:7:y:1996:i:3:p:445-462. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.