Surplus Maximization and Optimality

S-Tier
Journal: American Economic Review
Year: 2013
Volume: 103
Issue: 6
Pages: 2585-2611

Score contribution per author:

8.043 = (α=2.01 / 1 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Expected consumer's surplus rarely represents preferences over price lotteries. Still, I give sufficient conditions for policies which maximize aggregate expected surplus to be interim Pareto Optimal. Besides two standard partial equilibrium conditions, I assume that feasible prices satisfy a single-crossing property; and each consumer's indirect utility satisfies increasing differences in the price and income. I use the result to extend well-known welfare conclusions beyond the knife-edge quasilinear utility case. Since increasing differences puts no upper bound on risk aversion, the result is useful for applications in which risk aversion is important.

Technical Details

RePEc Handle
repec:aea:aecrev:v:103:y:2013:i:6:p:2585-2611
Journal Field
General
Author Count
1
Added to Database
2026-01-29