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Alternative measures of benefit for nonmarket goods which are substitutes or complements for market goods

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Abstract

Nonmarket goods include quality aspects of market goods and public goods which may be substitutes or complements for private goods. Traditional methods of measuring benefits of exogenous changes in nonmarket goods are based on Marshallian demand: change in spending on market goods or change in consumer surplus. More recently, willingness to pay and accept have been used as welfare measures. This paper defines the relationships among alternative measures of welfare for perfect substitutes, imperfect substitutes, and complements. Examples are given to demonstrate how to obtain exact measures from systems of market good demand equations.

Thanks also to the very helpful anonymous reviewers for Social Choice and Welfare.

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Authors and Affiliations

  1. Department of Agricultural Economics and Economics, Purdue University, Krannert Building, 47907, West Lafayette, IN, USA

    Edna Loehman

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  1. Edna Loehman
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Thanks to Professor Deb Brown, Purdue University, for her encouragement and help over the period in which this paper was written.

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Loehman, E. Alternative measures of benefit for nonmarket goods which are substitutes or complements for market goods. Soc Choice Welfare 8, 275–305 (1991). https://doi.org/10.1007/BF00183041

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  • DOI: https://doi.org/10.1007/BF00183041

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