Consumer Surplus from Discrete Choice Models

Consumer Surplus from Discrete Choice Models The budget-constrained random utility model (RUM) gives utility-consistent measures of welfare, but requires the length of the planning period be specified. An alternative is to treat the RUM probabilities as behavioral and calculate consumer surplus. This paper shows that such calculations lead to the same welfare measures as RUM calculations. The paper provides support and an alternative justification for the standard welfare measured. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Environmental Economics and Management Elsevier

Consumer Surplus from Discrete Choice Models

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Publisher
Elsevier
Copyright
Copyright © 1995 Academic Press
ISSN
0095-0696
DOI
10.1006/jeem.1995.1046
Publisher site
See Article on Publisher Site

Abstract

The budget-constrained random utility model (RUM) gives utility-consistent measures of welfare, but requires the length of the planning period be specified. An alternative is to treat the RUM probabilities as behavioral and calculate consumer surplus. This paper shows that such calculations lead to the same welfare measures as RUM calculations. The paper provides support and an alternative justification for the standard welfare measured.

Journal

Journal of Environmental Economics and ManagementElsevier

Published: Nov 1, 1995

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