Consumer surplus changes

Given that producers and consumers have already adapted so as to minimize their prospective losses, or to maximize their prospective gains. Figure 2 depicts for a predetermined time interval one example of the changes an air pollution increase can have upon consumer surplus and producer quasi-rent. The air pollution increase reduces the desirable properties of the output, making smaller the consumer s w llingijiess-to-pay and causing his demand... 

For example, if the demand curve shifts to D rather than D , market price will rise to P . If the supply shift from S to S is small enough, producers could thus actually see an increase in their quasi-rents. Qualitative results are unchanged, however alterations in producer quasi-rents and consumer surplus result from the pollution-caused changes in the two sectors. These two examples serve to illustrate the issues of concern here consumers and producers can bear very different economic gains or losses depending on the relative shifts of the demand and supply functions. Moreover, the distribution of these economic consequences can differ drastically with the slope of the demand function relative to the slope of the supply function. 

Implicit in the discussion immediately above is the assumption that the firm is forever locked into a particular production process and output bundle. However, the air pollution increase may differentially affect the production and the user costs of alternative processes and bundles. The firm will substitute toward the least costly alternative. Brick rather than painted wood may now, for example, enclose the firm s offices. A complete assessment of the quasi-rent consequences of the air pollution increase for the firm requires that these induced technical changes as well as production and user cost changes be taken into account. As Figure 2 demonstrates, these changes for the firm will also have consumer surplus consequences. 

First, the researchers estimated the response of the photovoltaic supply industry to the various alternatives by using data from three different sources a workshop of photovoltaic industry representatives, an assessment by an independent market research firm with photovoltaic experience, and a joint SERI/Jet Propulsion Laboratory analysis of the photovoltaic industry. Market estimates were derived from reviews and comparison of several available market studies and from a workshop attended by representatives of potential buyers in selected markets. Then, using a consumers surplus approach to calculate benefits, the authors used changes in price and quantity estimates attributed to the initiative to calculate the expected marginal net benefits of the initiative. Because of uncertainties in the size of potential intermediate markets, the effectiveness of the initiative was analyzed under a range of possible market scenarios. 

Of the demand at any given price, there is an element ch is on the margin of use if the price increased only a little, that portion of the demand is lost But with this slight level of increase, most users remain because they enjoy a consumer surplus - an indeterminate value in aggregate, but varying for each user. This is the value derived from consumption of the product (a transport service/infrastructure) over and above the price actually paid. The benefit of investment is measured by the change in consumer surplus as price levels fall, and fliis is a determinable value. 

A first step in the analysis is to show explicitly how the elements of surplus value are allocated. Marx s numerical example of expanded reproduction (Table 2.2) can be explored in more detail by distinguishing, for each sector i, between capitalist consumption (uj, incremental changes in constant capital (cfQ and changes in variable capital (eft)). Numerical values for these terms are displayed in Table 3.1. In Department 1, for example, one half of the extracted surplus value of 1,000 is invested in the expansion of capital, with 400 directed to new constant capital and 100 to new variable capital. The remaining 500 units of surplus value are consumed by Department 1 capitalists. 

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