Economics Dictionary of ArgumentsHome
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| Welfare function: A welfare function in economics represents society’s preferences over different allocations of resources or utility among individuals. It aggregates individual utilities into a single measure to evaluate social welfare, guiding policy decisions. Common forms include utilitarian (sum of utilities) and Rawlsian (focused on the least well-off) approaches. See also Welfare, Welfare gains, John Rawls, Utility._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Phillip Swagel on Welfare Function - Dictionary of Arguments
Krugman III 29 Welfare Function/optimal trade policy/labour rents/Kala Krishna/Kathleen Hogan/Phillip Swagel: A natural question to ask next is how valuable [an optimal trade] policy is in raising welfare. >Optimal tariffs/Kala Krishna, >International trade/Kala Krishna. Welfare gains are larger when labor rents constitute a share of the domestic wage bill, since the increased domestic production that results from optimal policies adds to consumer surplus and to workers’ rents, both of which the price-setting firm ignores. With our assumption of labor costs as 20 percent of unit cost (half of the wage bill), welfare gains from jointly optimal policies range from [e.g.,] $13 billion in 1985 to $1.7 billion in 1980. >Trade policies, >International trade. Costs: The presence of labor rents thus provides greater scope for strategic trade policy (see, e.g., Katz and Summers 1989)(1). And yet these gains remain fairly minor relative to the size of the markets involved. Moreover, it may be worse to implement the wrong policy than to do nothing. For example, if the optimal policies that result from Dixit’s model(2) are used instead of the ones identified as optimal by our model, welfare is slightly lower in some years. 1. Katz, L., and L. Summers. 1989. Can inter-industry wage differentials justify strategic trade policy? In Trade policies for international competitiveness, ed. R. Feenstra, 85-1 16. Chicago: University of Chicago Press. 2. Dixit, A. 1988. Optimal trade and industrial policy for the US. automobile industry. In Empirical methods for international trade, ed. R. Feenstra. Cambridge: MIT Press. Kala Krishna, Kathleen Hogan, and Phillip Swagel. „The Nonoptimality of Optimal Trade Policies: The U.S. Automobile Industry Revisited, 1979-1985.“ In: Paul Krugman and Alasdair Smith (Eds.) 1994. Empirical Studies of Strategic Trade Policy. Chicago: The University of Chicago Press._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Swagel, Phillip EconKrug I Paul Krugman Volkswirtschaftslehre Stuttgart 2017 EconKrug II Paul Krugman Robin Wells Microeconomics New York 2014 Krugman III Paul Krugman Alasdair Smith Empirical Studies of Strategic Trade Policy Chicago: The University of Chicago Press 1994 |
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