Economics Department
Working Papers in Economics
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TITLE:
A Welfare Decomposition in Quasi-Linear Economies
AUTHOR(S):
Taiji Furusawa, Hitotsubashi University
Hideo Konishi, Boston College
DOCUMENT TYPE: Article
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ABSTRACT:
We propose a decomposition of social welfare when consumers' preferences are described by quasi-linear utility functions. In our decomposition, social welfare is expressed as the sum of consumers' gross utilities and trade surplus of non-numeraire goods, whose consumption enters utility functions non-linearly. This decomposition is useful especially when we assess the impact of trade liberalization on individual countries. We propose a decomposition of social welfare when consumers' preferences are described by quasi-linear utility functions. In our decomposition, social welfare is expressed as the sum of consumers' gross utilities and trade surplus of non-numeraire goods, whose consumption enters utility functions non-linearly. This decomposition is useful especially when we assess the impact of trade liberalization on individual countries.