Surplus Maximization and Optimality

Author:

Schlee Edward E1

Affiliation:

1. Department of Economics, Arizona State University, PO Box 879801, Tempe, AZ 85287-9801.

Abstract

Expected consumer's surplus rarely represents preferences over price lotteries. Still, I give sufficient conditions for policies which maximize aggregate expected surplus to be interim Pareto Optimal. Besides two standard partial equilibrium conditions, I assume that feasible prices satisfy a single-crossing property; and each consumer's indirect utility satisfies increasing differences in the price and income. I use the result to extend well-known welfare conclusions beyond the knife-edge quasilinear utility case. Since increasing differences puts no upper bound on risk aversion, the result is useful for applications in which risk aversion is important. (JEL D11, D24, D42, D81, D83, L42)

Publisher

American Economic Association

Subject

Economics and Econometrics

Cited by 8 articles. 订阅此论文施引文献 订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献

1. Rationed price controls and “prices versus quantities”;Journal of Public Economic Theory;2022-09-15

2. MONEY METRICS IN APPLIED WELFARE ANALYSIS: A SADDLEPOINT REHABILITATION;International Economic Review;2021-08-18

3. The optimal minimum wage with regulatory uncertainty;Journal of Public Economic Theory;2017-10-20

4. Partial Equilibrium Welfare Analysis Under Uncertainty;General Equilibrium Foundation of Partial Equilibrium Analysis;2017

5. On Lionel McKenzie's 1957 intrusion into 20th‐century demand theory;Canadian Journal of Economics/Revue canadienne d'économique;2016-05

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