文档介绍：Environment and Natural Resource Economics Course
Nanjing Agriculture University
September 4 to September 30, 2006
Lecturers: Volker Beckmann, Humboldt University Max Spoor, ISS, The Hague
Justus Wesseler, Wageningen University
Lecture 2
Cost - Benefit Analysis
Lecturer: Dr. Justus Wesseler, Wageningen University
Intertemporal welfare economics
An allocation of resources is efficient, if it is impossible to make one individual better off without making the other individual worth off.
Consider two individuals (A, B), two time periods (0,1) with utility function U and who want to maximise consumption C
Intertemporal welfare economics
Allocation question: how is total consumption divided between two individuals in each period?
Assuming a single efficiently modity that can be either consumed or added to the stock of capital for future production. Efficiency requires:
1. Equality of A and B’s consumption discount rate;
2. Equality of rates of return to investment across firms;
3. Equality of the consumption discount rate with the rate of return to investment.
UA
UA
COA
C1A
(a)
COB
C1B
UB
UB
(b)
Figure Equality of consumption discount rates (Perman et al.: page 353)
•
•
An allocation is intertemporally efficient if the marginal rates of utility substitution are the same for A and B:
Consumption discount rate:
=> rA = rB = r
Figure Shifting consumption over time (Perman et al.: page 354)
CO
C1
C1max
C1b
C1a
C1
A
C0b
C0a
C0
•
C11
C12
C01a
C01b
C01
C02b
C02a
C02
Figure Equality of rates of return (Perman et al.: page 355)
•
An allocation is intertemporally efficient if the marginal rates of returns to investment are the same for all firms:
Figure Equality of rate of return and discount rate (Perman et al.: page 355)
CO
C1
C1*
C0*
a
b
c
•
•
•
An allocation is intertemporally efficient if the marginal rates of returns to investment equals the consumption rate of discount: = r.
C1
C1max
C1*
C