A Primer on Consumer Surplus and Demand : Common Questions and Answers

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...

Full description

Bibliographic Details
Main Author:	Peskin, Henry M.
Format:	ESMAP Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
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 http://hdl.handle.net/10986/17960

Description
Summary:	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.