Welfare Impact of Information with Experiments: The Crucial Role of the Price Elasticity of Demand

Stéphan Marette (), Jayson Lusk and Jutta Roosen

Economics Bulletin, 2010, vol. 30, issue 2, 1585-1593

Abstract: This paper focuses on the welfare effects of information computed from experimental methods eliciting willingness-to-pay. First, a theoretical model shows that the size of the welfare variation is related to the elasticity of the demand under the absence of information about a characteristic. Second, our estimates indicate that consumer demand from a laboratory auction is more price-elastic than time-series demand for similar products. As a result, the welfare change directly derived from individual willingness-to-pay is overestimated compared to the welfare change linked to an approach combining time-series demand with the mean willingness-to-pay premium.

Keywords: Experiment; Welfare; Consumers; Information; Demand (search for similar items in EconPapers)
JEL-codes: C9 Q1 (search for similar items in EconPapers)
Date: 2010-05-27
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Citations: View citations in EconPapers (2)

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Working Paper: Welfare impact of information with experiments: the crucial role of the price elasticity of demand (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-10-00223

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