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- Title
The Nonparametric Approach to Applied Welfare Analysis.
- Authors
Brown, Donald; Calsamiglia, Caterina
- Abstract
Changes in total surplus are traditional measures of economic welfare. We propose necessary and sufficient conditions for rationalizing individual and aggregate consumer demand data with individual quasilinear and homothetic utility functions. Under these conditions, consumer surplus is a valid measure of consumer welfare. For nonmarketed goods, we propose necessary and sufficient conditions on input market data for efficient production, i.e. production at minimum cost. Under these conditions we derive a cost function for the nonmarketed good, where producer surplus is the area above the marginal cost curve.
- Subjects
SURPLUS (Economics); CONSUMPTION (Economics); SUPPLY &; demand; CONSUMER behavior; CONSUMER confidence; ECONOMICS; ECONOMIC demand; CONSUMER goods; INDUSTRIAL costs
- Publication
Economic Theory, 2007, Vol 31, Issue 1, p183
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s00199-006-0087-5