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- Title
THE MEASUREMENT OF GAINS AND LOSSES.
- Authors
Morgan, James N.
- Abstract
This article focuses on the measurement of gains and losses associated with consumers' surplus. The concept of Consumer's surplus has turned out to be a source of great difficulty and confusion. It gradually became clear that there were several meanings to the concept, its definition varying with the problem at hand. Furthermore, with the development of the modern indifference approach, many of the problems in which consumer's surplus or its change had been used proved to be soluble by more elegant means. It could be shown that the gains from a certain type of change would be greater, or less, than the losses. It is often suggested that such results are applicable for public policy, if one will only set up a scheme at the same time to offset the gains and losses by taxes and compensation payments. The choice of concept depends on the purpose for which it is desired. Clearly, it is the price-compensating variation which is the best measure of the payment or tax which would offset a gain or loss resulting from a price change, and the quantity combing variation which would offset a gain or loss from an enforced change in quantity purchased, as in rationing.
- Subjects
CONSUMERS' surplus; VALUE (Economics); ECONOMIC demand; TAXATION; CONSUMERS; PUBLIC finance
- Publication
Quarterly Journal of Economics, 1948, Vol 62, Issue 2, p287
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1883223