Book contents
- Frontmatter
- Contents
- Preface
- 1 Introduction
- 2 Some basic concepts
- 3 The concept of consumer surplus
- 4 Topics in the theory of consumer surplus measures
- 5 Consumer surplus measures in quantity-constrained regimes
- 6 Public goods and externalities in consumption
- 7 How to overcome the problem of preference revelation; practical methodologies
- 8 Discrete choice models and environmental benefits
- 9 Consumer's surplus in an intertemporal context
- 10 Welfare change measures in a risky world
- 11 Money measures of the total value of environmental assets
- Notes
- Bibliography
- Index
2 - Some basic concepts
Published online by Cambridge University Press: 10 January 2011
- Frontmatter
- Contents
- Preface
- 1 Introduction
- 2 Some basic concepts
- 3 The concept of consumer surplus
- 4 Topics in the theory of consumer surplus measures
- 5 Consumer surplus measures in quantity-constrained regimes
- 6 Public goods and externalities in consumption
- 7 How to overcome the problem of preference revelation; practical methodologies
- 8 Discrete choice models and environmental benefits
- 9 Consumer's surplus in an intertemporal context
- 10 Welfare change measures in a risky world
- 11 Money measures of the total value of environmental assets
- Notes
- Bibliography
- Index
Summary
In order to be able to derive consumer surplus measures a number of essential tools and definitions are required. Instead of waiting until those different concepts arise in the text before introducing them, this chapter presents the basic tools used in the subsequent chapters. For this reason, the chapter serves as a basic point of reference for the analysis in the remainder of this volume.
Section 1 considers the properties of the direct utility function. Equipped with this function, we then turn to the consumer's utility maximization problem. Necessary and sufficient conditions for utility maximization are stated in Section 2, while the demand functions for commodities are derived and examined in Section 3. The rest of the chapter is devoted to a presentation of the indirect utility function, the expenditure function, and the compensation or money-metric function. These concepts will turn out to be extremely useful in derivations of consumer surplus measures.
By necessity, the presentation of different concepts must be brief. The main sources used in this chapter are Barten and Böhm (1982), Deaton and Muellbauer (1983), Diewert (1982), Katzner (1970), and Varian (1978). The reader interested in more details, as well as heavier and more precise mathematical artillery, is referred to one or other of the books listed above.
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- Publisher: Cambridge University PressPrint publication year: 1987