Exact welfare measurement for double-log demand with partial adjustment

Chi-Keung WOO, J. Zarnikau*, E. Kollman

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    7 Citations (Scopus)


    This paper demonstrates that a double-log demand with partial adjustment (DLPA) is consistent with the theory of consumer utility maximization. It offers an approach for calculating the compensating variation (CV), the exact welfare effect of a change in a price series when a DLPA is employed. Significant bias may result if the CV is based on a static double-log demand when a DLPA function is appropriate. We revisit a recent study of demand for gasoline in the U. S., finding that the CV based on the static double-log would overstate the welfare effect of a 6-month temporary gasoline tax by 7.5%.

    Original languageEnglish
    Pages (from-to)171-180
    Number of pages10
    JournalEmpirical Economics
    Issue number1
    Publication statusPublished - Feb 2012

    Scopus Subject Areas

    • Statistics and Probability
    • Mathematics (miscellaneous)
    • Social Sciences (miscellaneous)
    • Economics and Econometrics

    User-Defined Keywords

    • Compensating variation
    • Consumer surplus
    • Double-log demand
    • Welfare measures


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