Indirect utility function

Abstract: Integrability of incomplete demand systems is discussed. The concepts of weak integrability, quasi-expenditure function, quasi-indirect utility function, and quasi-utility function are defined. Their relationships to the expenditure function, indirect utility function, and utility function are developed. The dual structure of the quasi-functions permits exact welfare analysis and reveals the conditional preference structure for the commodities of interest. New results relating the uniqueness and exactness of consumer's surplus to the structure of the expenditure and indirect utility functions are obtained.

Abstract: The authors assess the macroeconomic and distributional effects of the privatization that Argentina began in 1989 in gas, electricity, telecommunications, and water and sanitation. Using a computable general equilibrium model, they track the effects of the changes observed between 1993, the first year by which all the major privatizations had taken place, and 1995, the most recent year for which data are available. In an innovative use of the model, they also assess the importance of the regulator in determining the distribution of gains and losses from utility privatization among sectors and income groups. They conclude that when regulators are effective, the annual gains from the private operation of utilities are about $3.3 billion, or 1.25 percent of GDP, and that all income classes benefit. Ineffective regulation cuts the gains from the reform by $1 billion or 0.35 percent of GDP. This cut in gains represents an implicit tax of 16 percent on the average consumer, paid directly to the owner of the utility rather than to the government. For the poorest income classes, this implicit tax is about 20 percent, meaning that good regulation is in the interest of the poor. The authors also show that the privatization of utilities cannot be blamed for the significant increase in unemployment observed in Argentina since 1993. Effective regulation can lead to a decline in unemployment, and ineffective regulation leads to only a small increase in unemployment. But the gains from utility privatization were not sufficient to offset the negative efficiency and distributional impact on the economy of the Tequila effect, which increased unemployment dramatically by limiting access to credit for users and producers alike.

Abstract: This paper analyzes the trade-off between working at home and out-of-home, ICT and commuting time. To this end, we develop a microeconomic demand system, which explicitly incorporates both time and income constraints. Commuting time is considered as the price to be paid for working out-of-home and a decrease in earnings as the price for working at home. For the latter, we find that working at home leads to a (marginally significant) reduction of the wage rate of about 19%, but this gap largely disappears when ICT is used for at home work. To examine the relation between out-of-home and at home work empirically, we estimate a translog indirect utility function, from which we are able to estimate substitution and price elasticities between working at home and out-of-home for The Netherlands. The results show that changes in ICT and commuting time display rather weak substitution effects on working out-of-home and at home, respectively. Moreover, individual characteristics – especially age and education – seem to be more important for the choice between working at home and out-of-home than ICT availability or commuting time.

Abstract: Measurement of practical welfare involves the concepts of income, real income, per capital real income, and occasionally a measure of inequality; the economic approach, however, works with such concepts as preferences, utility, and social welfare functions This paper maintains that, despite this apparent contrast, the economic and statistical approaches to the measurement of welfare are essentially identical The desired outcome of any discussion of welfare issues is that theory and measurement match so that each can suggest developments in the other The paper attempts to provide a systematic basis for measurement and to suggest areas in which further research is necessary