Measuring consumer surplus?
We are working with someone who is seeking a way to measure what I would refer to as structural changes. They want to measure the economic impact of changing the technology within an industry and development of a new product based on what was formerly a waste product. In their wording, they want to look at shifting the supply curve, an increase in prices and profitability, and an increase in consumer surplus. Based on my understanding of IMPLAN, the inherent assumptions are fixed prices and of course, a static analayis, which would not be a good fit to address these questions. Though I searched the forum, I did not find a concise listing of the assumptions (is there a link I can share to help them understand) nor a way in which IMPLAN might be used to help shed light on these changes. Can you give some suggestions or a way to use IMPLAN data or analysis to measure? Thanks.
-
Hello Janice, Thank you for your Forum post. Yes, you are right, IMPLAN is a static input/output model and does not take into consideration associated price and welfare changes that come with a change in production. Economic impact analysis looks backwards rather than forwards through the economy. In other words, to determine the effect of increased production in a local industry, economic analysis looks at the industries which supply the producing industry with the items and services for its production. From my understanding, you are looking more at the forward linkages which include price and welfare (consumer/producer surplus) changes. However, if you are comfortable in translating the increase in supply/price outside of the model and bringing in total output or total sales number to the software, you may use IMPLAN. It would need additional ground work on the part of the analyst but this could be done using IMPLAN. Key assumptions of the IMPLAN model can be found here- http://support.implan.com/index.php?option=com_content&view=article&id=377:377&catid=222:222 You may want to take a look at the article attached as it talks more about IMPLAN, its abilities and inabilities in a more comprehensive and robust manner.http://support.implan.com/index.php?option=com_content&view=article&layout=edit&id=238 Please let us know if you have any other questions. Regards, IMPLAN Staff
Please sign in to leave a comment.
Comments
1 comment