The Nonparametric Approach to Applied Welfare Analysis

Donald J. Brown () and Caterina Calsamiglia
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Donald J. Brown: Yale University

A chapter in Computational Aspects of General Equilibrium Theory, 2008, pp 41-46 from Springer

Abstract: Abstract Changes in total surplus are traditional measures of economic welfare. We propose necessary and sufficient conditions for rationalizing individual and aggregate consumer demand data with individual quasilinear and homothetic utility functions. Under these conditions, consumer surplus is a valid measure of consumer welfare. For nonmarketed goods, we propose necessary and sufficient conditions on input market data for efficient production, i.e. production at minimum cost. Under these conditions we derive a cost function for the nonmarketed good, where producer surplus is the area above the marginal cost curve.

Keywords: Welfare economics; Quasilinear utilities; Homothetic utilities; Nonmarketed goods; Afriat inequalities (search for similar items in EconPapers)
Date: 2008
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Journal Article: The Nonparametric Approach to Applied Welfare Analysis (2007)
Working Paper: The Nonparametric Approach to Applied Welfare Analysis (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-540-76591-2_4

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DOI: 10.1007/978-3-540-76591-2_4

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