New Compensating and Equivalent Variation Closed-form Solutions for Non-Separable Public Goods

Daniel H. Karney and Khyati Malik

Papers from arXiv.org

Abstract: This study finds exact closed-form solutions for compensating variation (CV) and equivalent variation (EV) for both marginal and non-marginal changes in public goods given homothetic, but non-separable, utility where a single sufficient statistic summarizes consumer preferences. The closed-form CV and EV expressions identify three economic mechanisms that determine magnitudes. One of these mechanisms, the relative preference effect, helps explain the disparity between willingness to pay (WTP) and willingness to accept (WTA) for public goods. We also show how our closed-form solutions can be employed to calculate WTP and WTA across income groups using estimates from existing empirical studies.

Date: 2024-01, Revised 2026-01
New Economics Papers: this item is included in nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2401.15493 Latest version (application/pdf)

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:arx:papers:2401.15493

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().