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Comparing stochastic price regimes:The limitations of expected surplus measures

Authors
Journal
Economics Letters
0165-1765
Publisher
Elsevier
Publication Date
Volume
14
Identifiers
DOI: 10.1016/0165-1765(84)90079-x

Abstract

Abstract Marshallian consumer's surplus can often be defended as a useful approximation to Hicksian compensating variation. Under price uncertainty, however, expected compensating variation is not a generally valid welfare measure, and expected consumer's surplus cannot be justified as an approximation to a rigorous construct.

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