Counting what counts: Moral considerations and market surplus

Paul Koster

No 23-008/VIII, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Public benefit-cost analysis of market policies often relies on a particular definition of market surplus that adds up consumer and producer surplus and external costs. This paper provides an overview of conceptual strategies to deal with moral considerations and then develops an adjusted market surplus function that is able to deal with heterogeneous normative perspectives. In a stylised model, new expressions for first-best Pigouvian taxes are developed that depend on moral considerations. A novel moral rule-of-half approximation is provided for the potential surplus gains of taxation or behavioural change.

Keywords: Welfare economics; Moral considerations; Normative Pluralism; Ethics and market value; Benefit-cost analysis; Pigouvian taxation. (search for similar items in EconPapers)
JEL-codes: A13 B59 D04 D61 D62 D63 (search for similar items in EconPapers)
Date: 2023-03-03
New Economics Papers: this item is included in nep-hme and nep-hpe
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20230008

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