Applied welfare analysis for consumers with commodity income

David Bigman, Haim Shalit

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

The paper analyzes the relevance and validity of the economic surplus concept for consumers receiving their income in commodities. For these consumers, such as farmers in developing countries, it is shown that the measure of welfare gains or losses via the area under the Marshallian demand and supply curves may lead to a considerable error. The paper provides boundaries for the error of approximation as a function of the share of the product in the consumer's budget and the income elasticity of demand.

Original languageEnglish
Pages (from-to)31-45
Number of pages15
JournalDe Economist
Volume131
Issue number1
DOIs
StatePublished - 1 Mar 1983

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