Knowledge that Transforms

[The theoretical validity of consumer surplus analysis at the level of the individual agent is shown to be independent of the assumption that individual preferences are transitive. With or without transitive preferences, consumer surplus can be calculated as an appropriate area to the left of compensated demand functions. Without transitive preferences consumer surplus cannot be interpreted as a money index of utility change nor does it have an exact willingness to pay interpretation; rather it must be interpreted as a hypothetical compensation payment. Without transitive preferences the measurement of consumer surplus using ordinary demand functions to approximate compensated demand functions must rely on a heuristic rule to the effect that the "inconsistency effect" of a price change is small since full duality between ordinary and compensated demand functions does not (generally) hold.]

Agricultural and Food Policy, Research Methods/Statistical Methods

[This paper presents a general framework for the analysis of programs over an infinite horizon in continuous time. Sufficient conditions for the existence of an optimal program are derived and are shown to reduce to the condition that the underlying preference ordering exhibit impatience in a topology determined by the underlying technology.]

[A simple scheme for making governmental decisions about the production and financing of public goods is presented. The "competitive" equilibria under the scheme are Pareto optimal; more importantly, they are Lindahl equilibria. Thus, it is never in any individual's interest to refuse to participate (no one will be worse off at the equilibrium than at his initial holding); moreover, the existence of equilibria is assured in the usual classical public-goods economies.]

[Cournot-Nash models of free entry into industries with large fixed costs yields equilibria with only a few operating firms, and each firm has some monopoly power. I consider a model where each firm's strategy is a function q(P) which specifies how much it will supply at each price. Unlike in Cournot models, the competitive equilibrium (where it exists) is always a Nash equilibrium in supply function strategies, and under weak assumptions it is the only equilibrium. This permits a Nash equilibrium model of the threat of entry as a deterrent to the exercise of monopoly power by operating firms.]

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. The Econometric Society is collaborating with JSTOR to digitize, preserve and extend access to Econometrica.