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Cover -- Half-title -- Title -- Copyright -- Contents -- Preface -- 1 Introduction -- Welfare economics -- The market economy, market failures, and government failures -- Outline and summary of the rest of this book -- Utility versus welfare -- The Pareto principle -- Pareto optimality and the market economy -- Compensation criteria -- Social welfare functions -- Consumer and producer surplus measures -- Market failures -- Social choice -- Applied welfare economics -- 2 Pareto optimality in a market economy -- 2.1 The Pareto criterion -- 2.2 General equilibrium in a market economy -- 2.3 The Pareto criterion in a market economy -- 2.4 A concluding remark -- 3 The compensation principle and the social welfare function -- 3.1 The compensation principle -- 3.2 The social welfare function -- 3.3 Measurability and comparability -- 3.4 The optimal distribution of welfare and income -- 3.5 Concluding remarks -- 4 Measuring welfare changes -- 4.1 Consumer surplus -- 4.2 Multiple price changes -- 4.3 Aggregation of consumer surplus -- 4.4 Compensating and equivalent variations -- 4.5 Some further results -- 4.6 Welfare measures for firms -- 4.7 Concluding remarks -- 5 Market failures - causes and welfare consequences -- 5.1 Decreasing average costs -- 5.2 Monopoly -- 5.3 Public goods -- 5.4 External effects -- 5.5 Market imbalances -- 5.6 Other sources of market failures -- 5.7 Market failures as a prisoner's dilemma -- 5.8 Concluding remarks -- 6 Public choice -- 6.1 Efficient provision of public goods -- 6.2 The typical taxpayer -- 6.3 Lindahl equilibrium -- 6.4 The median voter equilibrium -- 6.5 What do voters and bureaucrats maximize? -- 7 A 'Smorgasbord' of further topics -- 7.1 Property rights, policy instruments, and the depletion of stratospheric ozone -- 7.2 Coase's theorem -- 7.3 Local public goods -- 7.4 Pareto-efficient and optimal taxation
This is the first book in welfare economics to be primarily intended for undergraduates and non-specialists. Concepts such as Pareto optimality in a market economy, the compensation criterion, and the social welfare function are explored in detail. Market failures are analysed by using different ways of measuring welfare changes. The book also examines public choice, and the issues of provision of public goods, median voter equilibrium, government failures, efficient and optimal taxation, and intergenerational equity. The three final chapters are devoted to applied welfare economics: methods for revealing people's preferences, cost-benefit analysis, and project evaluation in a risky world. The book is intended for introductory and intermediate courses in welfare economics, microeconomics, and public economics. It will also be suitable for courses in health economics, environmental economics, and cost-benefit analysis, as well as those undertaking project evaluations in government agencies and private firms
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