Article

Consumer Demand and Welfare in Equilibrium Displacement Models

Michael K. Wohlgenant

in The Oxford Handbook of the Economics of Food Consumption and Policy

Published in print September 2011 | ISBN: 9780199569441
Published online November 2012 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780199569441.013.0012

Series: Oxford Handbooks in Economics

Consumer Demand and Welfare in Equilibrium Displacement Models

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The scope and value of the equilibrium displacement models (EDM) methodology in consumer demand and welfare analysis is extensive. This article reviews the basic elements of the model. It discusses different applications of the models in the literature that show the utility of the approach. The major forms of the EDM and implications for consumer demand and welfare are highlighted. An important question when using the EDM to generate results for changes in prices, quantities, and surplus values is how sensitive are the results to alternative plausible values of the partial elasticities of the demand/supply equations. It then turns at last to issues related to statistical precision and approximation errors. It concludes with the discussion of modifications and extensions that are likely to be made.

Keywords: equilibrium displacement models; welfare analysis; consumer demand; elasticities; statistical precision

Article.  13758 words. 

Subjects: Economics ; Econometrics and Mathematical Economics ; Agricultural, Environmental, and Natural Resource Economics

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