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Welfare Loss (welfare + loss)
Selected AbstractsThe distributional effects of carbon and energy taxes: the cases of France, Spain, Italy, Germany and UKENVIRONMENTAL POLICY AND GOVERNANCE, Issue 4 2002Dr. E. J. Symons This paper examines the likely immediate impact effect of some pollution taxes on the tax burden of households in a number of European countries. The total effect on households of such taxes is assessed using input,output analysis. Thus both the direct effect of taxes, through increased fuel prices, and the indirect effect, through increased prices of other goods, can be assessed simultaneously. This input,output approach allows the generation of direct plus indirect pollution intensities for all household consumption categories, for, in principle, a number of pollutants (CO2, SO2, NOx, particulates). These intensities could then be used to assess the impact on households of pollution taxes. This paper concentrates on CO2 and energy, performing a static analysis of the effect of a tax on the carbon or energy content of goods using the known consumption patterns for the various countries, both in aggregate and for different income groups. This allows a first assessment of the regressive/progressive effects of such taxes and an indication of consumer welfare loss. Copyright © 2002 John Wiley & Sons, Ltd and ERP Environment. [source] Population Ageing, Fiscal Pressure and Tax Smoothing: A CGE Application to Australia,FISCAL STUDIES, Issue 2 2006Ross Guest Abstract This paper analyses the fiscal pressure from population ageing using an intertemporal CGE model, applied to Australia, and compares the results with those of a recent government-commissioned study. The latter study uses an alternative modelling approach based on extrapolation rather than optimising behaviour of consumers and firms. The deadweight losses from the fiscal pressure caused by population ageing are equivalent to an annual loss of consumption of $260 per person per year in 2003 dollars in the balanced-budget scenario. A feasible degree of tax smoothing would reduce this welfare loss by an equivalent of $70 per person per year. Unlike the extrapolation-based model, the CGE approach takes account of feedback effects of ageing-induced tax increases on consumption and labour supply, which in turn impact on the ultimate magnitude of fiscal pressure and therefore tax increases. However, a counterfactual simulation suggests that the difference in terms of deadweight losses between the two modelling approaches is modest, at about $30 per person per year. [source] Welfare-improving adverse selection in credit markets,INTERNATIONAL ECONOMIC REVIEW, Issue 4 2002James Vercammen A model of simultaneous adverse selection and moral hazard in a competitive credit market is developed and used to show that aggregate borrower welfare may be higher in the combined case than in the moral-hazard-only case. Adverse selection can be welfare improving because in the pooling equilibrium of the combined model, high-quality borrowers cross subsidize low-quality borrowers. The cross subsidization reduces the overall moral hazard effort effects, and the resulting gain in welfare may more than offset the welfare loss stemming from distorted investment choices. The analysis focuses on pooling equilibria because model structure precludes separating equilibria. [source] Characterizing Pareto Improvements in an Interdependent Demand SystemJOURNAL OF PUBLIC ECONOMIC THEORY, Issue 3 2004Peter Kooreman Interdependent preferences generally imply Pareto inefficiency. For a general demand system, we provide a characterization of Pareto improvements. For a prominent parametric specification, the Linear Expenditure System, we characterize in detail the welfare loss associated with interdependent preferences. Using an estimated empirical model of this kind, we calculate the compensating variation corresponding to the welfare loss. [source] When (not) to indulge in ,puffery': the role of consumer expectations and brand goodwill in determining advertised and actual product qualityMANAGERIAL AND DECISION ECONOMICS, Issue 6 2000Praveen K. Kopalle We analyze why some firms advertise product quality at a level different from the actual quality of a product. By considering the interacting effects of product quality and advertising, we develop a dynamic model of consumer expectations about product quality and the development of brand goodwill to determine the optimal values for the decision variables. The model parameters are determined based on prior literature and we use numerical techniques to arrive at the solution. We then derive conditions under which a firm will find it optimal to overstate or understate product quality. The results suggest that quality may be overstated in markets characterized by high price sensitivity, low quality sensitivity, low brand loyalty, and high source credibility, suggesting the need for vigilance on the part of consumers, upper level managers and regulatory authorities in such market conditions. This is important because current regulatory resources are insufficient to reduce deceptive advertising practices (Davis JJ. 1994. Ethics in advertising decision-making: implications for reducing the incidence of deceptive advertising. Journal of Consumer Affairs28: 380,402). Further, the law of deceptive advertising prohibits some advertising claims on the ground that they are likely to harm consumers or competitors (Preston IL, Richards JI. 1993. A role for consumer belief in FTC and Lanham Act deceptive advertising cases. American Business Law Journal31: 1,29). Also, Nagler (1993. Rather bait than switch: deceptive advertising with bounded consumer rationality. Journal of Public Economics51: 359,378) shows that deceptive advertising causes a net social welfare loss and a public policy effectively preventing deception will improve social welfare. Copyright © 2000 John Wiley & Sons, Ltd. [source] CREDIT CRUNCH AND HOUSEHOLD WELFARE, THE CASE OF THE KOREAN FINANCIAL CRISIS,THE JAPANESE ECONOMIC REVIEW, Issue 4 2008SUNG JIN KANG We examine how the credit crunch in Korea in the late 1990s affected household behaviour and welfare. Using 1996,1998 household panel data, we estimate a consumption Euler equation, augmented by endogenous credit constraints. Korean households coped with the negative shocks of the 1997 credit crunch by reducing consumption of luxury items while maintaining food, education and health related expenditures. Our results show that, in 1997,1998, during the crisis, the probability of facing credit constraints and the resulting expected welfare loss from the binding constraints increased significantly, suggesting the gravity of the credit crunch at the household level. [source] Globalization versus Protectionism: Consequences for Long,Term Growth and Welfare in the SouthTHE JAPANESE ECONOMIC REVIEW, Issue 3 2002Hans Jarle Kind This paper develops an endogenous growth model with two intrinsically symmetric regions, the North and the South. The analysis shows that globalization tends to increase long,term economic growth, but the South may become deindustrialized and suffer a welfare loss. I none the less find that protectionism need not reverse international inequalities: on the contrary, owing to locational hysteresis the South may lageven further behind. However, with continued globalization welfare in the South will unambiguously increase. JEL Classification Numbers: F12, F13, F15. [source] A RENT EXTRACTION THEORY OF RIGHT OF FIRST REFUSAL,THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 2 2009Albert H. Choi When a seller encumbers a property with a right of first refusal, whenever a third party offers to purchase the property, the right-holder can acquire the property by simply matching the third party's offer. I model the right as a modified auction where the right-holder gets to observe the third party's bid before making his own. I show that, compared to the standard auctions, the right increases the joint profit of the seller and the right-holder by reducing the third party's profit. This result is independent of whether the third party is aware of the right's existence and whether the right creates a welfare loss. [source] WHOLESALE PRICING WHEN BUYERS ARE ASYMMETRIC COURNOT COMPETITORS,THE MANCHESTER SCHOOL, Issue 2 2006GIUSEPPE COLANGELO This paper focuses on the pricing policy of a well-informed profit- maximizing producer selling to asymmetric retailers who compete à la Cournot. An optimal upstream two-part tariff implies the exit of the inefficient retailer, thus causing downstream monopolization. When this would bring about a significant increase in the efficient retailer's bargaining power, as is plausible, the producer will try to avoid this and consequently choose a pricing scheme that does not cause downstream monopolization. When this is the case, two alternatives emerge: a two-part tariff (ensuring no downstream monopolization) or third-degree price discrimination. The more asymmetric in cost retailers are (consistent with no downstream monopolization), the more likely it is to see third-degree price discrimination as the equilibrium wholesale pricing. When third-degree price discrimination is implemented, a welfare loss is easily produced. [source] Winners and losers of conservation policies for European eel, Anguilla anguilla: an economic welfare analysis for differently specialised eel anglersFISHERIES MANAGEMENT & ECOLOGY, Issue 2 2010M. DOROW Abstract, Recreational specialisation theory was coupled with a discrete choice experiment to understand eel, Anguilla anguilla L., angler's heterogeneity in their reaction to regulatory changes and the associated welfare changes. Differently specialised eel anglers exhibited distinct preferences for catch variables and eel angling regulations. All anglers preferred slightly to moderately stricter regulations than are currently in place; however, such policies particularly benefited casual eel anglers. In contrast, advanced eel anglers would be most penalised by highly restrictive regulations as indicated by substantial reductions in economic welfare. Aversions to stricter regulations found for advanced anglers contradicted predictions from specialisation theory. From an eel management perspective, the implementation of some simple tools such as increased minimum-size limits will reduce angling mortality on eel and simultaneously increase the welfare of anglers. By contrast, highly restrictive eel angling regulations will result in considerable economic welfare losses of several million , per year for northern Germany alone. [source] ON THE DISTRIBUTIONAL CONSEQUENCES OF CHILD LABOR LEGISLATION*INTERNATIONAL ECONOMIC REVIEW, Issue 3 2005Dirk Krueger This article studies the effects of child labor legislation on human capital accumulation and the distribution of wealth and welfare. We calibrate our model to U.S. data circa 1880 and find that the consequences of restricting child labor or providing tax-financed education depend on the main source of individual household income. Households with significant financial assets unambiguously lose from government intervention, whereas high-wage workers benefit most from a child labor ban, and low-wage workers benefit most from free education. Introducing free education results in substantial welfare gains, whereas a child labor ban induces small welfare losses. [source] PRICE DISPERSION, INFLATION, AND WELFARE*INTERNATIONAL ECONOMIC REVIEW, Issue 2 2005Allen Head We examine the implications of inflation for both price dispersion and welfare in a monetary search economy. In our economy, if the degree of buyers' incomplete information about prices is fixed, both price dispersion and real prices are increasing in inflation. As the inflation rate approaches the Friedman rule, both price dispersion and welfare losses vanish. If households choose the number of prices to observe, then the optimal inflation rate may exceed the Friedman rule as inflation induces search and, up to a point, raises welfare by eroding market power. [source] Consumer Welfare and the Loss Induced by Withholding Information: The Case of BSE in ItalyJOURNAL OF AGRICULTURAL ECONOMICS, Issue 1 2004Mario Mazzocchi The paper develops a measure of consumer welfare losses associated with withholding information about a possible link between BSE and vCJD. The Cost of Ignorance (COI) is measured by comparing the utility of the informed choice with the utility of the uninformed choice, under conditions of improved information. Unlike previous work that is largely based on a single equation demand model, the measure is obtained retrieving a cost function from a dynamic Almost Ideal Demand System. The estimated perceived loss for Italian consumers due to delayed information ranges from 12 percent to 54 percent of total meat expenditure, depending on the month assumed to embody correct beliefs about the safety level of beef. [source] | ||||||||||||||||||||||