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Cost-Benefit Analysis for Investment Decisions: Chapter 15 (Cost-Effectiveness and Cost-Utility Analysis)

Author

Listed:
  • Glenn Jenkins

    (Queen's University, Canada and Eastern Mediterranean University, Cyprus)

  • Chun-Yan Kuo

    (Queen's University, Canada)

  • Arnold C. Harberger

    (University of California, Los Angeles, USA)

Abstract

Non-tradable items are those which are not traded internationally. They include items such as services where the demander and producer must be in the same location, and commodities which have low value relative to either their weight or volume. In such cases the transportation charges prevent producers from profitably exporting their goods. Typically, non-tradable goods include such items as electricity, water supply, all public services, hotel accommodation, real estate, construction, local transportation; goods with very high transportation costs such as gravel; and commodities produced to meet special customs or conditions of the country. The key element to be borne in mind when considering the tradable and non-tradable classification is where the price for the good (or service) in question is determined. If this determination takes place in the world market, the good should be considered tradable. If the setting of the price takes place by supply and demand in the local market, the good should be considered non-tradable. This chapter describes how the economic prices of non-tradable goods and services are estimated.

Suggested Citation

  • Glenn Jenkins & Chun-Yan Kuo & Arnold C. Harberger, 2011. "Cost-Benefit Analysis for Investment Decisions: Chapter 15 (Cost-Effectiveness and Cost-Utility Analysis)," Development Discussion Papers 2011-15, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:208
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    References listed on IDEAS

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    More about this item

    Keywords

    Cost Effectiveness; Cost Utility Analysis; Daly; Qaly; Marginal Cost Effectiveness;
    All these keywords.

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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