Interdependent preferences generally imply Pareto inefficiency. For a general demand system, we characterize Pareto improvements, as well as the taxes and subsidies that reduce the welfare loss from such preferences. Using an estimated empirical model of this kind, we calculate the compensating variation corresponding to the welfare loss.

This paper shows that “wasteful” litigation about intellectual property may be welfare enhancing. The aim of an intellectual property protection system is to solve the trade-off between ex-ante innovation incentive and ex-post monopoly welfare loss. The litigation about intellectual property in court decreases the expected rent from intellectual property, therefore reducing the incentive to inn...

This paper studies the effects of the structural variables of the Iranian industries sector on the welfare cost using to the Structure-Conduct-Performance (SCP) theory. In other words, we investigate the role of structural components and their effects on the size of the welfare cost in Iran's industry sector. We have used the Leibenstein's model to calculate the deadweight loss and then the pan...

The links between Medicaid and welfare exits are examined using longitudinal Medicaid program data. Few people who leave welfare get any sort of ongoing or transitional Medicaid protection. Moreover, it appears that many who are eligible for transitional benefits are not getting them. Finally, people with high expected medical costs appear to be less likely to leave welfare. The loss of Medicai...

Interdependent preferences generally imply Pareto inefficiency. For a general demand system, we provide a characterization of Pareto improvements. For a prominent parametric specification, the Linear Expenditure System, we characterize in detail the welfare loss associated with interdependent preferences. Using an estimated empirical model of this kind, we calculate the compensating variation c...

This paper studies the welfare cost of inflation in a frictional monetary economy with endogenous consumer search. Equilibrium entails price dispersion, where sellers compete for buyers by posting prices. We identify three channels through which inflation affects welfare. The real balance channel is the source of welfare loss. Its interaction with the price posting channel generates a welfare c...