Can Weak Substitution Be Rehabilitated?

29 Pages Posted: 21 Mar 2008 Last revised: 29 Dec 2022

See all articles by V. Kerry Smith

V. Kerry Smith

Arizona State University (ASU) - Economics Department; National Bureau of Economic Research (NBER)

Mary F. Evans

Claremont McKenna College - Robert Day School of Economics and Finance

H. Spencer Banzhaf

North Carolina State University - Department of Agricultural & Resource Economics; PERC - Property and Environment Research Center; National Bureau of Economic Research (NBER)

Christine Poulos

RTI International - Headquarters - Research Triangle Park

Date Written: March 2008

Abstract

This paper develops a graphical analysis and an analytical model that demonstrate how weak substitution can be used for non-market valuation. Both weak complementarity and weak substitution can be evaluated as restrictions that allow quantity or quality changes in non-market goods to be described as price changes that yield equivalent changes in individual well being. They are Hicksian equivalents in that the price changes yield the same utility changes as would the quantity or quality changes. After discussion of several potential applications of weak substitution, the paper develops the parallel between the restriction and recent strategies from modeling differentiated goods.

Suggested Citation

Smith, V. Kerry and Evans, Mary F. and Banzhaf, H. Spencer and Poulos, Christine, Can Weak Substitution Be Rehabilitated? (March 2008). NBER Working Paper No. w13903, Available at SSRN: https://ssrn.com/abstract=1112015

V. Kerry Smith (Contact Author)

Arizona State University (ASU) - Economics Department ( email )

Tempe, AZ 85287-3806
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Mary F. Evans

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States
909.607.3423 (Phone)

H. Spencer Banzhaf

North Carolina State University - Department of Agricultural & Resource Economics ( email )

Box 8109
3332 Nelson Hall
Raleigh, NC 27695-8109
United States

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Christine Poulos

RTI International - Headquarters - Research Triangle Park ( email )

3040 Cornwallis Road
P.O. Box 12194
Research Triangle Park, NC 27709
United States

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