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Alternative Measures of Benefit for Nonmarket Goods Which are Substitutes or Complements for Market Goods

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  • Loehman, Edna T.

Abstract

Nonmarket goods include quality aspects of market goods and public goods which may be substitutes or complements for private goods. Traditional methods of measuring benefits of exogenous changes in nonmarket goods are based on Marshallian demand: change in spending on market goods or change in consumer surplus. More recently, willingness to pay and accept have been used as welfare measures . This paper defines the relationships among alternative measures of welfare for perfect substitutes, imperfect substitutes, and complements. Examples are given to demonstrate how to obtain exact measures from systems of market good demand equations .

Suggested Citation

  • Loehman, Edna T., 1991. "Alternative Measures of Benefit for Nonmarket Goods Which are Substitutes or Complements for Market Goods," Working Papers 115913, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
  • Handle: RePEc:ags:rpspwp:115913
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    File URL: http://ageconsearch.umn.edu/record/115913/files/WP-20.pdf
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    References listed on IDEAS

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    1. Jeffrey T. LaFrance, 1986. "The Structure of Constant Elasticity Demand Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(3), pages 543-552.
    2. McKenzie,George W., 1983. "Measuring Economic Welfare," Cambridge Books, Cambridge University Press, number 9780521248624.
    3. Willig, Robert D., 1978. "Incremental consumer's surplus and hedonic price adjustment," Journal of Economic Theory, Elsevier, vol. 17(2), pages 227-253, April.
    4. Bradford, David F, 1970. "Benefit-Cost Analysis and Demand Curves for Public Goods," Kyklos, Wiley Blackwell, vol. 23(4), pages 775-791.
    5. Hause, John C, 1975. "The Theory of Welfare Cost Measurement," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1145-1182, December.
    6. Silberberg, Eugene, 1972. "Duality and the Many Consumer's Surpluses," American Economic Review, American Economic Association, vol. 62(5), pages 942-952, December.
    7. Bradford, David F. & Hildebrandt, Gregory G., 1977. "Observable preferences for public goods," Journal of Public Economics, Elsevier, vol. 8(2), pages 111-131, October.
    8. Vartia, Yrjo O, 1983. "Efficient Methods of Measuring Welfare Change and Compensated Income in Terms of Ordinary Demand Functions," Econometrica, Econometric Society, vol. 51(1), pages 79-98, January.
    9. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762.
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    Cited by:

    1. Carson, Richard & Flores, Nicholas E. & Hanemann, W. Michael, 1998. "Sequencing and Valuing Public Goods," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 314-323, November.
    2. Cotterill, Ronald W. & Pinkerton, Don C., 1993. "Motives for Mergers in Food Manufacturing," Working Papers 116111, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    3. Cotterill, Ronald W. & Salih, Hachim M., 1992. "Testing For Risk Premiums In The Wheat-Flour Subsector," Working Papers 116109, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    4. Steahr, Thomas E. & Roberts, Tanya, 1993. "Microbial Foodborne Disease: Hospitalizations, Medical Costs and Potential Demand for Safer Food," Working Papers 116110, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    5. Langan, Glenn E. & Cotterill, Ronald W., 1994. "Estimating Brand Level Demand Elasticities and Measuring Market Power for Regular Carbonated Soft Drinks," Working Papers 116168, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    6. Wen, Hong & Haller, Lawrence E., 1994. "Price Determination in the Bottled Water Industry: A Case Study of Poland Spring," Working Papers 116165, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    7. Bhuyan, Sanjib & Cotterill, Ronald W., 1994. "Countervailing Power and Seller Performance in U.S. Food and Tobacco Manufacturing Industries," Working Papers 116163, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.

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    Agribusiness; Marketing;

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