Publication: A Primer on Consumer Surplus and Demand : Common Questions and Answers
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2006-05
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2006-05
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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.
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“Peskin, Henry M.. 2006. A Primer on Consumer Surplus and Demand : Common Questions and Answers. Knowledge Exchange series;no. 5. © http://hdl.handle.net/10986/17960 License: CC BY 3.0 IGO.”
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