The Consumer Surplus and the Unit of Measurement

3 Pages Posted: 20 May 2019

See all articles by James P. Howard, II

James P. Howard, II

Johns Hopkins Applied Physics Laboratory

Date Written: April 26, 2019

Abstract

In this note, we review estimating the consumer surplus for a good or service using linear or Tobit regression. Assuming the consumer surplus is found using one of these models, we prove a theorem that if the price quoted and quantity purchased change inversely, then the consumer surplus does not. Finally, we demonstrate the theorem using an abstract example with sample data.

Keywords: consumer surplus, demand curve, linear regression

JEL Classification: C51, H41

Suggested Citation

Howard, James, The Consumer Surplus and the Unit of Measurement (April 26, 2019). Available at SSRN: https://ssrn.com/abstract=3379314 or http://dx.doi.org/10.2139/ssrn.3379314

James Howard (Contact Author)

Johns Hopkins Applied Physics Laboratory ( email )

11100 Johns Hopkins Road
Laurel, MD 20723
United States
2405920219 (Phone)
20723 (Fax)

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