A Primer on Consumer Surplus and Demand : Common Questions and Answers
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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| Language: | English en_US |
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World Bank, Washington, DC
2006-05
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| Subjects: | APPROACH, BATTERIES, CONSUMER DEMAND, CONSUMER SURPLUS, CONSUMERS, CONSUMPTION LEVELS, CONTINGENT VALUATION, DEMAND CURVE, DEMAND CURVES, ELECTRICITY, ELECTRICITY DEMAND, ELECTRICITY SUPPLY, ENERGY CONSUMPTION, ENERGY COSTS, ENERGY DEMAND, ENERGY NEEDS, ENERGY POLICIES, ENERGY POLICY, ENERGY PRICES, INCOME, KEROSENE, LIVING STANDARDS, MARKET PRICE, MICROECONOMIC ANALYSIS, PRICE CHANGES, PRICE OF ELECTRICITY, PUBLIC UTILITIES, RURAL ELECTRIFICATION, SUBSTITUTE, SURPLUS, TAXATION, TRANSITION ECONOMIES, WEALTH, |
| Online Access: | http://documents.worldbank.org/curated/en/2006/05/7089743/primer-consumer-surplus-demand-common-questions-answers https://hdl.handle.net/10986/17960 |
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