Measuring Welfare Changes in Quantity Constrained Regimes
The concepts of compensating and equivalent variation have been widely used both in empirical and in theoretical work. The strengths and weaknesses of these concepts have been carefully investigated, and methods have been proposed to calculate exact measures instead of approximating measures. For a recent survey of the issues involved, see e.g. McKenzie (1983), and Takayama (1984).
KeywordsDistance Function Utility Level Indifference Curve Price Vector Equivalent Variation
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