scholarly journals Two extensions of consumer surplus

SERIEs ◽  
2021 ◽  
Author(s):  
Luis C. Corchón ◽  
Ramón J. Torregrosa
Keyword(s):  
Lower Bound ◽  
Social Welfare ◽  
Social Welfare Function ◽  
Consumer Surplus ◽  
Utility Functions ◽  
Cournot Equilibrium ◽  
Income Effects ◽  
Welfare Losses ◽  
The Social ◽  
Quasilinear Utility

AbstractWe study consumer surplus in a single market when (a) there is a lower bound in the consumption of the outside good and (b) the weights in the social welfare function given to consumers and firms are different. We assume quasilinear utility. When the lower bound constraint on the consumption of the outside good is binding, income effects arise in demand. In some cases, Cournot equilibrium output is below equilibrium output without this constraint because the constraint makes demand less elastic. When the weights given to consumers and firms are not identical, social welfare is not necessarily concave and profits might be negative at the unrestricted optimum. We characterize social welfare optimum with a bound on maximum losses in a class of utility functions. We offer a formula to find the percentage of welfare losses due to oligopoly in this case.

Measuring Well-Being

2019 ◽  
pp. 41-82
Author(s):  
Matthew D. Adler
Keyword(s):  
Social Welfare ◽  
Social Welfare Function ◽  
Well Being ◽  
Utility Functions ◽  
Equivalent Income ◽  
Von Neumann ◽  
Individual Preferences ◽  
Good Account ◽  
The Social ◽  
Income Measure

This chapter discusses the well-being measure: a key component of the social welfare function (SWF) framework. This measure, w(·), assigns well-being numbers to individuals in outcomes so as to reflect admissible well-being comparisons (of well-being levels and/or well-being differences). In order for the SWF framework to function, these admissible comparisons must include interpersonal as well as intrapersonal comparisons; the chapter explains why. It then shows how von Neumann/Morgenstern (vNM) utility functions can be used to construct an interpersonally comparable well-being measure that respects individual preferences. A different preference-based well-being measure, the equivalent-income measure, is also reviewed. Although the preference view of well-being is dominant in the SWF literature, w(·) may instead be based upon a non-preference view of well-being, such as an hedonic or objective-good account. The chapter concludes by considering why some economists have been skeptical about interpersonal comparisons.

scholarly journals Incomplete Regulation, Asymmetric Information, and Collusion-Proofness

2012 ◽  
Vol 2012 ◽  
pp. 1-17
Author(s):  
Marco Meireles ◽  
Paula Sarmento
Keyword(s):  
Asymmetric Information ◽  
Social Welfare ◽  
Social Welfare Function ◽  
Consumer Surplus ◽  
Relative Importance ◽  
Side Payments ◽  
The Social ◽  
Regulated Firm

In an incomplete regulation framework, the regulator cannot replicate all the possible outcomes by himself since he has no influence over some firms in the market. Due to asymmetric information, it may be better for the regulator to allow the unregulated firms to extract a truthful report from the regulated firm through side-payments under collusion, and therefore the “collusion-proofness principle” may not hold. In fact, by introducing an exogenous number of unregulated firms, social welfare differences seem to favour a collusion-allowing equilibrium. However, such result will depend on the relative importance given by the regulator to the consumer surplus in the social welfare function.

scholarly journals Optimal Policy with Heterogeneous Preferences

2008 ◽  
Vol 8 (1) ◽  
Author(s):  
Louis Kaplow
Keyword(s):  
Social Welfare ◽  
Public Goods ◽  
Optimal Policy ◽  
Income Tax ◽  
Social Welfare Function ◽  
Income Taxation ◽  
Heterogeneous Preferences ◽  
Commodity Taxation ◽  
Policy Rules ◽  
The Social

Abstract Optimal policy rules—including those regarding income taxation, commodity taxation, public goods, and externalities—are typically derived in models with homogeneous preferences. This article reconsiders many central results for the case in which preferences for commodities, public goods, and externalities are heterogeneous. When preference differences are observable, standard second-best results in basic settings are unaffected, except those for the optimal income tax. Optimal levels of income taxation may be higher, the same, or lower on types who derive more utility from various goods, depending on the nature of preference differences and the concavity of the social welfare function. When preference differences are unobservable, all policy rules may change. The determinants of even the direction of optimal rule adjustments are many and subtle.

STORE PROMOTION, MANUFACTURER COMPETITION AND WELFARE

2021 ◽  
pp. 1-18
Author(s):  
HAO WANG ◽  
XUNDONG YIN ◽  
ALICE Y. OUYANG
Keyword(s):  
Social Welfare ◽  
Consumer Preferences ◽  
Consumer Surplus ◽  
Weighted Average ◽  
Brand Name ◽  
Price Distortion ◽  
Online Platforms ◽  
Brand Competition ◽  
The Social ◽  
Partial Exclusion

This study evaluates the partial exclusion effects of store promotion. We find that a manufacturer with a better brand name has a higher willingness-to-pay for promotion services offered by retail stores or online platforms. The promotion results in higher sales-weighted average prices (wholesale and retail) and a larger inter-brand price gap. The stores or platforms extract more profits from manufacturers and consumers through the promotion services. The effects on consumer surplus and social welfare depend on whether the promotion alters consumer preferences. If it does, more consumers would be choosing their less-preferred brands because of the larger inter-brand price gap, which would be socially inefficient. If it does not, the promotion may help to correct the price distortion, but the social welfare effect is positive only when the promotion effect is small enough. In both cases, the promotion services reduce the total consumer surplus by softening inter-brand competition.

Cost-Benefit Analysis and Social Welfare Functions

2019 ◽  
pp. 397-422
Author(s):  
Matthew D. Adler
Keyword(s):  
Social Welfare ◽  
Policy Analysis ◽  
Moral Philosophy ◽  
Social Welfare Function ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Well Being ◽  
Benefit Analysis ◽  
Important Policy ◽  
The Social

This chapter describes and compares the two most important policy-analysis methodologies in economics: cost-benefit analysis (CBA) and the social-welfare-function (SWF) framework. Both approaches are consequentialist and welfarist; both are typically combined with a preference-based view of well-being. Despite these similarities, the two methodologies differ in significant ways. CBA translates well-being impacts into monetary equivalents, and ranks outcomes according to the sum total of monetary equivalents. By contrast, the SWF framework relies upon an interpersonally comparable measure of well-being. Each possible outcome is mapped onto a list (vector) of these well-being numbers, one for each person in the population; the ranking of outcomes, then, is driven by some rule (the SWF) for ranking these well-being vectors. The utilitarian SWF and the prioritarian family of SWFs (each corresponding to well-developed positions in moral philosophy) are especially plausible. The case for using CBA rather than one of these SWFs is weak—or so the chapter argues.

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