In standard economic environments, axiomatic foundations are developed for the two aggregate Hicksian consumer surplus measures aggregate willingness-to-pay (compensating variation) and aggregate willingness-to-accept (equivalent variation) as ordinal social welfare indices, without the imposition of any extraneous assumptions such as the interpersonal utility comparison and the expected utilit...

We introduce three types of consumer recognition: identity recognition, asymmetric preference recognition, and symmetric preference recognition. We characterize price equilibria and compare profits, consumer surplus, and total welfare. Asymmetric preference recognition enhances profits compared with identity recognition, but firms have no incentive to exchange information regarding customer-spe...

Improved consumer information about horizontal aspects of products of similar quality leads to better consumer matching but also higher prices, so consumer surplus can go up or down, while proÞts rise. With enough quality asymmetry though, the higher quality (and hence larger) Þrm’s price falls with more information, so both effects beneÞt consumers. This is when comparative advertising is used...

The rise of online sharing systems offers consumers the opportunity to grant other consumers access to infrequent-use goods or spaces they own, or the opportunity to access those they do not. Thereby, consumers’ decision-making and usage behaviors are likely to change, which in turn will affect consumer surplus and thus social welfare. Within this paper, first steps towards understanding the ec...

This paper presents a model in which some consumers shop on the basis of price alone, without attention to product quality. A firm may “cheat” (i.e., cut quality) to exploit these inattentive consumers. In the unique symmetric equilibrium, firms follow a mixed strategy involving both price and quality dispersion. Firms are less likely to cheat when there are fewer inattentive consumers, which i...

Under the North American Free Trade Agreement (NAFTA) tariffs on U.S. potato imports to Mexico were phased out by 1993. Citing phytosanitary issues, in 1996, the Mexican government placed quantitative restrictions on U.S. potato imports and restricted their import only to designated border areas. This article estimates the welfare cost of restricting U.S. potato imports into Mexico. We find tha...

The first essay of this doctoral dissertation empirically measures the business value of personalization using data consisting of 600,000 email advertisements with varying degrees of personalization sent to 35,000 customers over a nine month period. While we confirm that personalization based on customers past interests generates a positive response, we also report evidence that customers are c...

The personal computer Central Processing Unit (CPU) has undergone a dramatic improvement in quality, accompanied by an equally remarkable drop in prices in the 1990s. How have these developments in the CPU market affected consumer welfare? This paper estimates demand for CPUs and measures consumer welfare, using the pure characteristics demand model. The model is based on a quasilinear utility ...

The purpose of this paper is to estimate the welfare cost of inflation in Iran. We first use the long-horizon regression approach developed by Fisher and Seater (1993) to obtain an estimate of the inflation rate elasticity of money demand and then the Baily’s consumer surplus approach to calculate the welfare cost function. The results show that reducing inflation rate from 40% to 0% increases ...