Consumer Benefits of Infrastructure Services

39 Pages Posted: 25 Mar 2014

See all articles by Carmit Schwartz

Carmit Schwartz

University of New South Wales (UNSW)

W. Erwin Diewert

University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)

Kevin J. Fox

UNSW Australia Business School, School of Economics

Date Written: November 16, 2013

Abstract

This paper provides methodologies for evaluating consumer benefits of infrastructure services using potentially observable information. We define benefit measures for consumers and, using general principles from the index number literature, derive alternative first and second order approximations to these measures under the assumption of fixed prices for market goods and services. We then describe how the benefit measures and their associated approximations can be used in quantifying the economic benefits when prices are allowed to change endogenously as the provision of infrastructure services changes. In addition, under quite unrestrictive assumptions, a measure of welfare change based only on potentially observable data is derived.

Keywords: Consumer benefi ts, infrastructure services, fi rst order approximation, second order approximation, flexible functional forms, index number theory

JEL Classification: C43, D61, H41, H43, H54

Suggested Citation

Schwartz, Carmit and Diewert, W. Erwin and Fox, Kevin J., Consumer Benefits of Infrastructure Services (November 16, 2013). UNSW Australian School of Business Research Paper No. 2014-17. Available at SSRN: https://ssrn.com/abstract=2414181 or http://dx.doi.org/10.2139/ssrn.2414181

Carmit Schwartz

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

W. Erwin Diewert

University of British Columbia (UBC) - Department of Economics ( email )

997-1873 East Mall
Vancouver, BC V6T 1Z1
Canada
604-822-2544 (Phone)
604-822-5915 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Kevin J. Fox (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia
(02)9385-3320 (Phone)
(02)9313-6337 (Fax)

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