The Welfare Effects of Metering Ties
نویسنده
چکیده
Critics of current tying doctrine argue that metering ties can increase consumer welfare and total welfare without increasing output and that they generally increase both welfare measures. Contrary to those claims, we prove that metering ties always lower both consumer welfare and total welfare unless they increase capital good output. We further show that under market conditions we argue are realistic (which include a lognormal distribution of usage rates that are independently distributed from per-usage valuations), metering ties always harm consumer welfare, even when output increases. Whether metering ties raise or lower total welfare depends on the dispersion of desired usage, the cost structure, and the dissipation of profits caused by metering. For realistic cost values, metering ties will reduce total welfare if the dispersion in desired usage of the metered good is below 0.62. (For comparison, 0.74 is the dispersion of income in the United States.) If 5% of metering profits are dissipated, metering will reduce total welfare for all cost levels unless the dispersion in desired usage exceeds 150% of the dispersion of income in the United States (JEL Codes: C72, K21, L12, L40, L41, L42)
منابع مشابه
Comparing Methods of Ramp Metering for On-Ramps to Improve the Operational Conditions at Peak Hours
This paper aims to evaluate and compare the effects of different methods of ramp metering on the operational conditions of traffic flow at three levels: the network level (including the freeway and its connected ramps), the entrance ramp, and the upstream segment of the entrance. To achieve this aim, one of the most important urban freeways in the metropolis of Isfahan was selected. The traffic...
متن کاملEfficiency and Equity Effects of Electricity Metering: Evidence from Colombia
I show that provision of electricity meters leads to a large reduction in electricity consumption over the first four months following meter installation. This is consistent with previous overconsumption by unmetered users facing a zero marginal price. However, it also reflects underconsumption by metered customers paying a marginal price exceeding marginal cost. I quantify these welfare effect...
متن کاملWelfare and the Multifaceted Decision to Move
Whether poor single mothers move in response to welfare benefits has important implications for social policy in a federal system. Many scholars claim that welfare does not affect migration. These claims are not definitive, however, because the models underlying them rely on problematic assumptions and do not adequately control for nonwelfare determinants of migration. I address these shortcomi...
متن کاملImpact of Irrigation Groundwater Price and Quota Policies in Changing Cropping Patterns in the Province Kerman in Iran
Objective: Water scarcity is a growing global problem and increasing population pressures, living standards and the growing demand for environmental quality have evoked all the governments to represent better solutions about water resources management. In addition, there are growing political ties for reducing water use in agriculture that follow enough environmental benefits and increase the w...
متن کاملImpact of Irrigation Groundwater Price and Quota Policies in Changing Cropping Patterns in the Province Kerman in Iran
Objective: Water scarcity is a growing global problem and increasing population pressures, living standards and the growing demand for environmental quality have evoked all the governments to represent better solutions about water resources management. In addition, there are growing political ties for reducing water use in agriculture that follow enough environmental benefits and increase the w...
متن کامل