Abstract
This paper shows that the disparity between an agent’s willingness-to-pay and willingness-to-accept for a nonmarket good becomes small and the two values converge to the same limit only if the agent’s initial consumption level of the numéraire is large enough. A necessary and sufficient condition for convergences is provided, and a formula is provided to compute the limit value directly from a utility function. These convergence results are derived when the nonmarket goods are indivisible and qualitatively differentiated, and then extended for the divisible case.
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An earlier version of this paper was presented at the 7th International Meeting of the Society for Social Choice and Welfare at Osaka. I would like to thank an associate editor and a referee of this journal for their constructive comments and suggestions. I also thank Jiro Akita, Haruo Imai, and Akira Okada for helpful conversations. The research of this paper is partially supported by Ministry of Education, Science and Culture through JSPS Grant-in-Aids for Scientific Research No. 19530146 and No. 21530162.
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Open Access This is an open access article distributed under the terms of the Creative Commons Attribution Noncommercial License (https://creativecommons.org/licenses/by-nc/2.0), which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.
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Miyake, M. Convergence theorems of willingness-to-pay and willingness-to-accept for nonmarket goods. Soc Choice Welf 34, 549–570 (2010). https://doi.org/10.1007/s00355-009-0416-2
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DOI: https://doi.org/10.1007/s00355-009-0416-2