Consumer's Surplus As an Exact and Superlative Cardinal Welfare Indicator

Robert G Chambers ()

International Economic Review, 2001, vol. 42, issue 1, pages 105-19

Abstract: This article shows that the Bennet-Bowley consumer surplus measure is an exact measure of Allais' disposable surplus if the consumer's utility function is of the translation-homothetic generalized quadratic form. The Bennet-Bowley consumer surplus measure, therefore, is a superlative cardinal welfare measure for the entire class of translation homothetic preferences. Because the exactness results in this article apply for cardinal welfare measures, they can be meaningfully aggregated across consumers to make aggregate welfare comparisons.

Date: 2001

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Persistent link: http://EconPapers.repec.org/RePEc:ier:iecrev:v:42:y:2001:i:1:p:105-19

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