COST BIAS IN BENEFIT-COST ANALYSIS: COMMENT; AND BENEFIT- COST ANALYSIS AND EXTERNALITIES IN PRIVATE CHOICE: COMMENT; AND PROBLEMS OF BIAS IN INPUT PRICING FOR BENEFIT-COST ANALYSIS: A REPLY

THIS SERIES OF COMMENTS AND THE REPLY ARE BASED ON AN EARLIER PAPER BY DUNN (SEE REVIEW T-0027). THE STOBER, FALK AND EKELUND COMMENT SPECIFIES THAT MARKET PRICES OF RESOURCES MAY FAIL TO MEASURE SOCIAL OPPORTUNITY COSTS IN THREE WAYS: (1) MARKET PRICES ARE CHANGED AS A RESULT OF THE GOVERNMENT PROJECT; (2) IMPERFECT COMPETITION EXISTS IN THE MARKETS FOR PRODUCTS PRODUCED WITH THE RESOURCES; (3) IMPERFECT COMPETITION EXISTS IN THE HIRING OF THE GIVEN FACTORS OF PRODUCTION. THEY ANALYZE SOURCES (1) AND (2), DEMONSTRATING THAT USE OF "EX ANTE" PRICES MAY RESULT IN MISSING A LOSS IN PRODUCER'S SURPLUS AS WELL AS IN CONSUMER'S SURPLUS. SOLO, IN HIS COMMENT, CONTENDS THAT CONSUMER'S SURPLUS IS BUT ONE OF MANY EXTERNALITIES, BOTH POSITIVE AND NEGATIVE, AND THAT ITS EXCLUSION FROM THE MEASUREMENT OF COSTS THUS DOES NOT NECESSARILY BIAS THE MEASURE OF COSTS. DUNN AGREES WITH THE SUBSTANCE OF THE STOBER, FALK AND EKELUND PAPER, REPLYING THAT THEY HAVE PROVIDED A BROADER TREATMENT OF THE PROBLEMS THAN THAT TO WHICH HE HAD RESTRICTED HIS EARLIER PAPER. DUNN DISAGREES WITH SOLO'S COMMENT, REPLYING THAT IT DOES SEEM REASONABLE TO TRY TO REACH ROUGHLY THE SAME DEGREE OF COMPLETENESS IN MEASURING BOTH SIDES OF THE COST-BENEFIT RATIO AND NOTING THAT CONSUMER'S SURPLUS IS INCLUDED IN THE MEASURE OF BENEFITS. /BPR/

  • Availability:
  • Supplemental Notes:
    • Vol 34, pp 563-568, 569-570, 571
  • Corporate Authors:

    N/A

    ,   United States 
  • Authors:
    • Stober, W J
    • Falk, L H
    • Ekelund, R B
    • Solo, R A
    • Dunn, R M
  • Publication Date: 1968-4

Media Info

Subject/Index Terms

Filing Info

  • Accession Number: 00201781
  • Record Type: Publication
  • Source Agency: Traffic Systems Reviews & Abstracts
  • Files: TRIS
  • Created Date: Jul 14 2003 12:00AM