Publication: A Primer on Consumer Surplus and Demand : Common Questions and Answers
Date
2006-05
ISSN
Published
2006-05
Author(s)
Peskin, Henry M.
Abstract
Measuring consumer's surplus is an
increasingly popular approach to quantifying the monetary
benefits of energy projects at the World Bank. This paper
provides a brief primer on the concept and addresses some
concerns and criticisms for this method. The contents
include: consumer demand - this paper assumes that the
benefit measured by consumer's surplus is a
satisfactory measure of the benefit of policy that brings
about lower energy prices and considers key challenges in
this approach; estimating the demand curve; are two points
adequate for estimating the demand curve - a large gain in
consumer's surplus is an expected outcome of the large
fall in energy costs due to electrification; whose demand
curve is it anyway; does willingness-to-pay overestimate
ability-to-pay; why is consumer's surplus so large;
aren't the estimates affected by subsidies and
taxation; and why not simply ask consumers about their
benefits from electrification.
Link to Data Set
Citation
“Peskin, Henry M.. 2006. A Primer on Consumer Surplus and Demand : Common Questions and Answers. Knowledge Exchange series;no. 5. © World Bank, Washington, DC. http://hdl.handle.net/10986/17960 License: CC BY 3.0 IGO.”