Measurement of Welfare Changes Caused by Large Price Shifts: An Issue in the Power Sector, Părțile 63-273World Bank, 1995 - 30 pagini World Bank Discussion Paper No. 273. This paper discusses the problems of measuring welfare changes caused by large price increases or decreases in the power sector--for example, when tariffs are raised to cover long-term costs or when electrification displaces more expensive alternatives. Traditional methods of measuring welfare changes have centered on the use of the "consumer surplus" as an indicator. But the accuracy rate of this method is high only when income elasticities are low and when relatively small price changes are analyzed. Because the demand for electricity has very high income elasticities in developing countries--which is where very large price shifts usually occur--the paper argues that the consumer surplus can be an unreliable form of measuring the welfare impacts of these price changes. The author provides alternative methods of measurement, showing how the compensating or equivalent variations in income can be calculated whenever the demand curve is available. |
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Measurement of Welfare Changes Caused by Large Price Shifts ..., Părțile 63-273 Robert Bacon Vizualizare completă - 1995 |
Termeni și expresii frecvente
annex approximation error Approximations to Equivalent base price budget line cardinal measure change in welfare compensating income compensating level Compensating Variations constant consumer surplus measure cross-price elasticity CV measure demand function difference equation differential equation electrification Equivalent and Compensating equivalent variation evaluated Exact Measures exact value expenditure final prices high income elasticities household initial and final integration interval of convergence large price changes Large Price Shifts level of compensating level of income level of utility linear demand curve measure of welfare money income obtain old price original price own-price elasticity P.O. Box percent power sector price elasticity price fall price path price rise prices and quantities prices have changed Quadratic Approximations Robert Bacon Roy's Identity Sector Reform set of prices shows Slutzky's small price changes spreadsheet Taylor series tion true CV true welfare measures unity utility curve utility function Vartia's approach Vartia's technique welfare impact World Bank