Abstract
The consumer surplus is a fundamental building block of the social surplus as defined in Chap. 3 The consumer surplus depends on the willingness-to-pay (WTP) for a good or for a service. As described in Chap. 2, the WTP is the sum of the consumer surplus and any actual amount paid (Frank 2006, 160–164). The consumer surplus then is the benefit consumers receive for receiving something at a price less than they were willing to pay.
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Notes
- 1.
Haab and McConnell (2002) use WTP and consumer surplus interchangeably due to the parameters of their example case, where the WTP and consumer surplus were equal. This is not generally true.
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Howard, J.P. (2016). Consumer Surplus of Flood Insurance. In: Socioeconomic Effects of the National Flood Insurance Program. SpringerBriefs in Political Science. Springer, Cham. https://doi.org/10.1007/978-3-319-29063-8_4
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DOI: https://doi.org/10.1007/978-3-319-29063-8_4
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