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Techniques for Measuring the Welfare Effects of Protection: Appraising the Choices
Journal article   Peer reviewed

Techniques for Measuring the Welfare Effects of Protection: Appraising the Choices

Bang Jeon and George von Furstenberg
Journal of policy modeling, v 8(2), pp 273-303
01 Jul 1986

Abstract

Economic models Effects Measurement Protectionism Socioeconomic factors Techniques Welfare
In recent years, a bewildering variety of proposals has appeared on how the static welfare costs of protection are best conceptualized and measured. A survey is presented of how the concepts differ and under what conditions they turn out to be special cases of each other. Besides the Marshallian triangle method and 2 Hicksian welfare measures, based on compensating and equivalent variations, several other welfare indicators proposed by Debreu (1951, 1954), Harberger (1971), McKenzie and Pearce (1976), Chipman and Moore (1980), and others are examined in a review of the theoretical literature on techniques for measuring losses of consumer and producer surplus. Approximations and sensitivity tests are then examined, especially those provided by upper and lower bounding and parametric estimation methods proposed by Willig (1973, 1976), Seade (1978), Hausman (1981), and Vartia (1983). Of the techniques surveyed, the Marshallian and the 2 Hicksian welfare measures have been used the most often in the literature.

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