Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/64738 
Year of Publication: 
2010
Series/Report no.: 
cemmap working paper No. CWP01/11
Publisher: 
Centre for Microdata Methods and Practice (cemmap), London
Abstract: 
This paper proposes a framework to model empirically welfare effects that are associated with a price change in a population of heterogeneous consumers. Individual demands are characterized by a nonseparable model which is nonparametric in the regressors, as well as monotonic in unobserved heterogeneity. In this setup, we first provide and discuss conditions under which the heterogeneous welfare effects are identified, and establish constructive identification. We then propose a sample counterpart estimator, and analyze its large sample properties. For both identification and estimation, we distinguish between the cases when regressors are exogenous and when they are endogenous. Finally, we apply all concepts to measuring the heterogeneous effect of a chance of gasoline price using US consumer data and find very substantial differences in individual effects.
Subjects: 
Welfare
Consumer Surplus
Price Effect
Nonseparable Model
Nonparametric
Quantile
Endogeneity
Compensating Variation
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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