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Inequality Constrained Estimation of Consumer Surplus
Author(s) -
Adamowicz W. L.,
GrahamTomasi T.,
Fletcher J. J.
Publication year - 1989
Publication title -
canadian journal of agricultural economics/revue canadienne d'agroeconomie
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 37
eISSN - 1744-7976
pISSN - 0008-3976
DOI - 10.1111/j.1744-7976.1989.tb03363.x
Subject(s) - citation , library science , sociology , west virginia , management , operations research , economics , history , computer science , archaeology , engineering
II ( Welfare measures derived from statistical demand functions are random variables. If the purpose of developing demand estimates is to derive welfare measures, estimation procedures should extend beyond consideration of demand relationships and concentrate on the measurement of welfare in an accurate and theoretically consistent fashion. In this paper we employ an explicitly Bayesian framework to estimate welfare measures under theoretical restrictions. An empirical example is presented using the travel cost recreation demand model. The result is a welfare measure that satisfies theoretical restrictions, is readily estimable and exhibits a lower variance than the corresponding unrestricted measure. The estimation process also provides a mechanism for evaluation of prior information and some insight into the choice of functional form for the demand function. Inequality Constrained Estimation of Consumer Surplus