The strange persistence of consumer surplus
James Stodder ()
Applied Economics Letters, 2013, vol. 20, issue 11, 1096-1099
Abstract:
Despite its abandonment in theoretical work, a literature search shows that variation in consumer surplus (VCS) is the overwhelming choice in applied work -- not compensating variation (CV) or equivalent variation (EV). How can this be explained? Besides the obvious ease of computation, there are three good reasons for the persistence of VCS. (1) The Willig bounds on VCS usually give close upper and lower bounds on CV and EV, respectively, and are thus conservative in the estimation of EV. (2) Without integrability, all three measures are inaccurate. Common quasi-linear utility assumptions for VCS, however, imply integrability. (3) Even with integrability, the expected values of highly nonlinear CV and EV measures cannot be determined by substituting prices or quantities into the estimated equations; simulations are required. Thus, VCS is not only simpler, it may also be more accurate.
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
http://hdl.handle.net/10.1080/13504851.2013.788776 (text/html)
Access to full text is restricted to subscribers.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:20:y:2013:i:11:p:1096-1099
Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20
DOI: 10.1080/13504851.2013.788776
Access Statistics for this article
Applied Economics Letters is currently edited by Anita Phillips
More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().