The WTP-WTA Gap for Public Goods: New Insights from Compensating and Equivalent Variation Closed-Form Solutions

• Tác giả: Daniel H Karney, Khyati Malik
• Ngôn ngữ: eng
• Ký hiệu phân loại: 339.22 Distribution of aggregate personal income and wealth
• Thông tin xuất bản: 2024
• Bộ sưu tập: Báo, Tạp chí
• ID: 201398

Tóm tắt

 Comment: New title
  New results related to EV (and associated theorems) and certainty equivalence
  Edits to Introduction with minor edits elsewhere
  Additional referencesThis study finds exact closed-form solutions for compensating variation (CV) and equivalent variation (EV) for both marginal and non-marginal changes in public goods given homothetic utility. The parameters for these solutions are recoverable from observable data in empirical applications as a single sufficient statistic summarizes consumer preferences. The closed-form CV and EV expressions identify three economic mechanisms that determine the magnitudes of CV and EV. One of these mechanisms, the relative preference effect, helps explain the disparity between willingness to pay (WTP) and willingness to accept (WTA) for public goods.