Compensated Variation in Random Utility Models
John Dagsvik
Discussion Papers from Statistics Norway, Research Department
Abstract:
In this paper we introduce the notion of random expenditure function and derive the distribution of the expenditure function and corresponding compensated choice probabilities in the general case when the (random) utilities are nonlinear in income. We also derive formulae for expenditure and choice under price (policy) changes conditional on the initial utility level. This is of particular interest for welfare measurement because it enables the researcher to analyze the distribution of Compensating variation.
Keywords: Random expenditure function; Compensated choice probabilities; Compensating variation. (search for similar items in EconPapers)
JEL-codes: C25 D61 (search for similar items in EconPapers)
Date: 2001-06
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Citations: View citations in EconPapers (2)
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Persistent link: https://EconPapers.repec.org/RePEc:ssb:dispap:299
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