Environmental Economics

Exact Welfare Measures for a Policy Ban Revisited

Welfare measures for eliminating (or providing) a good based on observable data are discussed. The key is to determine the price range for integration by recovering the choke price of the Hicksian demand. The formulae to compute exact welfare measures, namely the compensating and equivalent variation, for banning a good based on commonly used single-equation demand models are provided. Unlike the Willig bounds of consumer surplus for a fixed price change, in the case of a policy ban, it is questionable whether consumer surplus can be a reasonable approximation for the exact welfare measures.

  • Keywords

    1. Benefits Analysis
    1. Benefits Analysis - Valuation
    1. Benefits Analysis - Valuation - Other
    Environmental Media:
    f. Multimedia
    Huang, Ju-Chin
    EPA Project Officer/ Manager:
    Geographic Area:
    Study Purpose:
    Methodology Development & Evaluation
    Inventory Record #: EE-0503
  • Participating Organizations

    Research Organization:

    Environmental Protection Agency, Office of Policy, Econonomics, and Innovation, National Center for Environmental Economics and University of New HampshireAddress:
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    Date Linked: 05/28/2009