Applied Welfare Economics

Applied Welfare Economics

Applied Welfare Economics

Applied Welfare Economics


Applied Welfare Economics extends a conventional cost-benefit analysis by using important results in welfare economics. The analysis is extended to accommodate trade and income taxes, time, internationally traded goods, and non-tax distortions, including externalities non-competitive behavior, public goods and price-quantity controls. The book is primarily intended as a reference for academic economists, policy analysts, and graduate students. Formal analysis is explained using diagrams to make it more adaptable to the different institutional arrangements encountered in applied work.


Applied Welfare Economics is a graduate course taught to economics honours students in the Department of Economics at the Australian National University. It was initially taught by Ted Sieper, who over two decades moulded the course into one that played an important role in the training of students who passed through the program. While drawing the material together in a coherent framework, he uncovered many challenging propositions and puzzles that occupied the minds of many colleagues within the Department and at other institutions around Australia and overseas. After his departure I was given the responsibility of teaching the course, whereupon it became abundantly clear how important welfare is to economics. This realization made it much easier for me to teach introductory economics to first year students in a way that captured their interest and attention.

Many people have made contributions to this book. Foremost among them of course is Ted, whose lectures provided a large portion of the material in the first two chapters. I have also benefited enormously from conversations with George Fane over many years. His thorough comments on earlier work and the patience he displayed when confronted with another of my propositions is greatly appreciated. There are many others who have assisted me with their valuable time and insights, and they include Akihito Asano, Scott Austin, Matt Benge, Simon Grant, Peter Hartley, Mark Harrison, Alex Robson, and Albert Schweinberger. I am also grateful for the beneficial interactions with students in the honours course, in particular, Declan Trott who kindly agreed to read the final draft and Lucy Rees who provided helpful comments. Their enthusiasm and diligence motivated me to work harder at giving better intuitions and explanations for the material.

I would especially like to acknowledge the assistance received from two recently departed colleagues, John Logan and Ross Parish. John's enthusiasm for economics gave me the interest and desire to learn more about the subject. While I had limited personal contact with Ross Parish, I benefited considerably from his written work. He has, in my view, made important contributions to applied welfare analysis over the years and his wisdom and insights were greatly appreciated by those lucky enough to have known him. As is always the case, however, I am solely responsible for any errors, generalizations, or oversights that undoubtedly remain in this book.

Finally I would like to thank everyone at Oxford University Press who contributed to this book. In particular, Andrew Schuller, who kindly agreed to consider the first draft, and Jennifer Wilkinson, Jenni Craig, Carol Bestley, and Virginia Masardo, who guided the manuscript through its many different phases. All were a pleasure to work with and were thoroughly professional.

Chris Jones

Canberra, Australia . . .

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