Consumer's Surplus versus Compensating Variation Revisited

Jeffrey LaFrance ()

No 271258, 1991 Annual Meeting, August 4-7, Manhattan, Kansas from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: Consumer's surplus and a second-order approximation to compensating variation are compared to the exact compensating variation for a subsystem of several commodities. An empirical application to the relative retail price distortions created by the U.S. dairy program is presented. In the application, a new specification for weakly integrable incomplete demand models is developed and estimated. The integrable demand model has sufficient flexibility that it is not rejected by the data. Both welfare approximations are found to introduce large errors in the measurement of deadweight losses.

Keywords: Consumer/Household Economics; Demand and Price Analysis (search for similar items in EconPapers)
Pages: 20
Date: 1991-08-04
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Citations: View citations in EconPapers (10)

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Journal Article: Consumer's Surplus versus Compensating Variation Revisited (1991)
Working Paper: Consumer's surplus versus compensating variation revisited (1991)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea91:271258

DOI: 10.22004/ag.econ.271258

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