Nonparametric estimation of exact consumers surplus and deadweight loss
We apply nonparametric regression models to estimation of demand curves of the type most often used in applied research. From the demand curve estimators we derive estimates of exact consumers surplus and deadweight loss, that are the most widely used welfare and economic efficiency measures in area...
| Päätekijät: | , |
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| Muut tekijät: | |
| Aineistotyyppi: | Working Paper |
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MIT Center for Energy and Environmental Policy Research
2009
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| Linkit: | http://hdl.handle.net/1721.1/50211 |
| _version_ | 1826199902116380672 |
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| author | Hausman, Jerry A. Newey, Whitney K. |
| author2 | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. |
| author_facet | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. Hausman, Jerry A. Newey, Whitney K. |
| author_sort | Hausman, Jerry A. |
| collection | MIT |
| description | We apply nonparametric regression models to estimation of demand curves of the type most often used in applied research. From the demand curve estimators we derive estimates of exact consumers surplus and deadweight loss, that are the most widely used welfare and economic efficiency measures in areas of economics such as public finance. We also develop tests of the symmetry and downward sloping properties of compensated demand. We work out asymptotic normal sampling theory for kernel and series nonparametric estimators, as well as for the parametric case. The paper includes an application to gasoline demand. Empirical questions of interest here are the shape of the demand curve and the average magnitude of welfare loss from a tax on gasoline. In this application we compare parametric and nonparametric estimates of the demand curve, calculate exact and approximate measures of consumers surplus and deadweight loss, and give standard error estimates. We also analyze the sensitivity of the welfare measures to components of nonparametric regression estimators such as the number of terms in a series approximation. |
| first_indexed | 2024-09-23T11:27:37Z |
| format | Working Paper |
| id | mit-1721.1/50211 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T11:27:37Z |
| publishDate | 2009 |
| publisher | MIT Center for Energy and Environmental Policy Research |
| record_format | dspace |
| spelling | mit-1721.1/502112019-04-12T23:31:13Z Nonparametric estimation of exact consumers surplus and deadweight loss Hausman, Jerry A. Newey, Whitney K. Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. We apply nonparametric regression models to estimation of demand curves of the type most often used in applied research. From the demand curve estimators we derive estimates of exact consumers surplus and deadweight loss, that are the most widely used welfare and economic efficiency measures in areas of economics such as public finance. We also develop tests of the symmetry and downward sloping properties of compensated demand. We work out asymptotic normal sampling theory for kernel and series nonparametric estimators, as well as for the parametric case. The paper includes an application to gasoline demand. Empirical questions of interest here are the shape of the demand curve and the average magnitude of welfare loss from a tax on gasoline. In this application we compare parametric and nonparametric estimates of the demand curve, calculate exact and approximate measures of consumers surplus and deadweight loss, and give standard error estimates. We also analyze the sensitivity of the welfare measures to components of nonparametric regression estimators such as the number of terms in a series approximation. Supported by the NSF. 2009-12-16T00:00:49Z 2009-12-16T00:00:49Z 1993 Working Paper 93014 http://hdl.handle.net/1721.1/50211 35721008 MIT-CEEPR (Series) ; 93-014WP. 41 p application/pdf MIT Center for Energy and Environmental Policy Research |
| spellingShingle | Hausman, Jerry A. Newey, Whitney K. Nonparametric estimation of exact consumers surplus and deadweight loss |
| title | Nonparametric estimation of exact consumers surplus and deadweight loss |
| title_full | Nonparametric estimation of exact consumers surplus and deadweight loss |
| title_fullStr | Nonparametric estimation of exact consumers surplus and deadweight loss |
| title_full_unstemmed | Nonparametric estimation of exact consumers surplus and deadweight loss |
| title_short | Nonparametric estimation of exact consumers surplus and deadweight loss |
| title_sort | nonparametric estimation of exact consumers surplus and deadweight loss |
| url | http://hdl.handle.net/1721.1/50211 |
| work_keys_str_mv | AT hausmanjerrya nonparametricestimationofexactconsumerssurplusanddeadweightloss AT neweywhitneyk nonparametricestimationofexactconsumerssurplusanddeadweightloss |