The welfare economics of public policy : a practical approach to project and policy evaluation
- Cheltenham, UK : Edward Elgar, 2004
- 688 p.
1. Introduction -Positive versus normative economics -Some controversies in welfare economics -Compensating in welfare economics -Compensating and equivalent variations -Efficiency and equity -Welfare weightings -Overview of the book 2. Pareto optimality and the Pareto criterion -Pareto optimality and the Pareto criterion defined -The pure consumption case -Production efficiency -The product-mix case -Pareto optimality and competitive equilibrium -Limitations of Pareto optimality and the Pareto principle 3. The compensation principle and the welfare function -The compensation principle -Utility possibility curves and the potential welfare criterion -The social welfare function -Limitations of the social welfare function approach -Potential versus actual gains -Practical applied policy analysis: the relationship of general equilibrium and partial equilibrium analysis 4. Welfare measurement for the producer -The profit-maximizing firm -Welfare measures for the producing firm -The relationship of profit, quasirent and producer surplus -Producer welfare measurement in the input market -Evaluation of nonprice benefits -Input quantity restrictions for the competitive firm -Investment and intertemporal welfare measurement 5. Consumer surplus and consumer welfare -The notion of consumer surplus -Path dependence of consumer surplus -Uniqueness of consumer surplus -Constancy of the marginal utility of income 6. Willingness to pay and consumer welfare -Willingness-to-pay measures -The nibble paradox -Equality of compensating and equivalent variation -Graphical analysis of willingness to pay -Consumer surplus as a WTP measure: the single-price-change case -Consumer surplus as a WTP measure: the multiple price-change-case -Consumer surplus as a WTP measure:the price-income-change case -Exact measurement of WTP 7. Factor supply and factor owner welfare -Initial considerations in factor owner welfare measurement -Endogenous versus exogenous income -Path dependence and related issues -Willingness to pay revisited -Surplus change as an approximation of WTP -The general price change case for the factor owner -Multiple price changes with changes in exogenous income -An example -Imposed quantity changes -Areas between supply (or demand) curves as welfare measures for multiple changes -Exact measurement of WTP for factor owners 8. Aggregation and economic welfare analysis of market-oriented policies -Aggregation of WTP: the producer case -Aggregation of WTP:the case of consumers and factor owners -Aggregation of money measures of utiliy change -Aggregation of WTP over producers and consumers -Welfare analysis of simple market distortions -Laissez-faire and government intervention -International trade -Empirical considerations in market-level welfare analysis -The choice of market for estimation 9. Multimarket analysis and general equilibrium considerations -Welfare effects in vertically related markets -Welfare effects in horizontally related markets -General equillibrium welfare measurements -Welfare measurement with existing distortions in other markets -General equilibrium considerations in specification, estimation and interpretation 10. The welfare economics of market structure with applications to international trade -The simple monopoly model -The simple monopsony model -The cases of oligopoly and oligopsony -Demands and cost conditions -Economies of scale -Market intermediaries -Labor unions -Antitrust economics -International trade considerations -Bargaining, game theory and welfare economics -Empirical considerations in markets subject to market power 11. The welfare economics of informatio with applications to advertising and information policy -The role of price expectation -The role of quality information -Measuring the welfare effects of partial and misleading information -An example of government delay in disseminating contamination information -Apparent versus actual changes in tastes and preferences -The welfare effects of advertising -Evaluation of public information policy 12. Stochastic welfare economics with applications to agricultural policy analisys -Consumer welfare with random prices and instantaneous adjustment -Prodeucer welfare with random but anticipated prices -Can uncertainty improve welfare? -Additional considerations regarding welfare effects of price stabilization -Instability with uncertainty -Welfare measures under risk aversion -Market-based estimation of ex ante and ex post WTP -Market-based estimation of ex ante WTP -An example -Agricultural price estabilization -Federal crop insurance policy 13. Nonmarket welfare measurement with applications to environmental economic policy -Externalities -Public goods -Impure public goods -Measurement of external environmental benefits and costs 14. Intertemporal considerations in cost-benefit analysis with applications to natural resource economics -The social discount rate -Measuring welfare over time: cost-benefit analysis -Intertemporal aspects of the consumer problem -Intertemporal welfare analysis of risky projects and policies -Investing in research and development -Economic welfare analysis of natural resource policy -A general framework for dynamic and sustainable economic welfare 15. Conclusions and further considerations -Emphasis on application -Welfare maximization and cost-benefit analysis -Income distribution -Making economic welfare analysis useful in the policy process