Working Paper: NBER ID: w13903
Authors: V. Kerry Smith; Mary F. Evans; H. Spencer Banzhaf; Christine Poulos
Abstract: This paper develops a graphical analysis and an analytical model that demonstrate how weak substitution can be used for non-market valuation. Both weak complementarity and weak substitution can be evaluated as restrictions that allow quantity or quality changes in non-market goods to be described as price changes that yield equivalent changes in individual well being. They are Hicksian equivalents in that the price changes yield the same utility changes as would the quantity or quality changes. After discussion of several potential applications of weak substitution, the paper develops the parallel between the restriction and recent strategies from modeling differentiated goods.
Keywords: No keywords provided
JEL Codes: Q51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| weak substitution (D52) | Hicksian consumer surplus measures (D11) |
| changes in quality of nonmarket goods (L15) | changes in price of private goods (P22) |
| consumption level of private good (D10) | utility derived from nonmarket good (Q21) |
| weak substitution (D52) | household behaviors in response to environmental threats (D10) |
| private expenditures (H59) | substitutes for public goods (H41) |