What is an appropriate welfare measure for efficiency of local public policies inducing migration?
Tatsuhito Kono and
Mathematical Social Sciences, 2018, vol. 91, issue C, 25-35
We demonstrate what welfare measure should be used for local public policies inducing migration. We show that the two conventional definitions of welfare measures having equivalency with compensation testing in a single-location economy without externalities have inconsistencies with compensation testing in a spatial economy: one definition has no equivalency with compensation testing even without externalities, and the other definition has difficulties arising from a problem in which the measure before a project has a non-zero value. Finally, we demonstrate that a specific welfare measure defined by Wheaton (1977) has appropriate properties with compensation testing in both cases with and without externalities.
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:91:y:2018:i:c:p:25-35
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