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How to calculate the loss of consumer surplus welfare
Looking back on the previous analysis, the problem of broadband market development is generally attributed to "low user demand", but it is difficult for operators to formulate detailed countermeasures against this word. According to the latest research of IDC China, the general trend of global broadband market is that the number of global broadband access users reached 206 million in 2005. From 2002 to 2005, it maintained a high growth rate of at least 50%. The broadband market in China is growing, but the growth rate is declining, and this trend will continue, and it will be lower than 10% by 20 10. These data are undoubtedly worth pondering by the industry. IDC also conducted a survey on the current situation of customers' consumption in major cities in China. The research shows that China users' spending on broadband access has not increased significantly, and customers' willingness to pay is the bottleneck factor affecting the growth of broadband access. Yang Feng, senior analyst of China Telecom Research Department of IDC, also made a more in-depth analysis: "We made a comparison between mobile operators and fixed-line operators. According to the annual reports of listed companies of operators, the value-added business income of China Mobile and China Unicom is 62.5 billion yuan, while the new broadband business income of China Telecom and China Netcom (including broadband access and related application income) is only 35.6 billion yuan, and the latter has great mining potential. Let's take the audio and video services widely used by users as an example. In the survey, more than 75% of users are unwilling to pay for the broadband multimedia services they use, and some users who have paid have given up the paid services. Therefore, the low willingness of users to pay is an important factor hindering the development of the broadband market. " Why is there a "hole" in willingness to pay? Because the existing broadband service content can not effectively stimulate users' willingness to pay. At present, operators have gradually realized this problem. Simply relying on access fees cannot drive market growth, and broadband application is the most important direction. How to build high-quality broadband applications remains to be explored. IDC's more detailed demand model restricts the development of broadband market-users' willingness to pay is low. It is of great significance to divide customer communication needs into four stages. Of course, in the next step, the industry will look forward to suggestions on how to comprehensively improve the willingness of broadband users in China to pay. The so-called consumer surplus refers to the difference between the highest price that consumers are willing to pay for a certain quantity of a certain commodity and the actual market price of these commodities. Marshall deduced the concept of "consumer surplus" from the theory of marginal utility value. Fan Lian put forward several calculation methods about consumer surplus. Consumer surplus is an important indicator to measure consumer welfare and is widely used as an analytical tool. The social welfare of industry is equal to the sum of consumer surplus and producer surplus, or equal to the difference between total consumption utility and production cost. 1977a.k. dixit and Stiglitz introduced internal economies of scale into the general equilibrium model, and reached the conclusion that the market considered the most moderate marginal profit and the society considered the consumer surplus. It is generally believed that the biggest condition of consumer surplus is that marginal utility equals marginal expenditure. Second, the consumer status 1. Consumption is the only purpose of all production. In the market economy, production, distribution, exchange and consumption together constitute a complete social production process. The purpose of production is consumption, and consumption is a necessary condition for the continuation and development of human society. French physiocrats Bois Gibel said: "The so-called wealth is just a lot of consumption, that is, huge wealth." Smith said: consumption is the sole purpose of all production, and the interests of producers should be taken seriously only when they can promote the interests of consumers. This principle is completely self-evident and hardly needs to be proved. But under mercantilism, the interests of consumers are almost sacrificed for the interests of producers; This theory does not seem to regard consumption as the ultimate goal of all industry and commerce, but production as the ultimate goal of industry and commerce. Say also believes: "All products are used for consumption sooner or later. In fact, they are produced entirely for consumption. " Marshall pointed out: "The ultimate regulator of all demand is the temporary demand of consumption." Under the condition of market economy, supply-oriented economy has changed into demand-oriented economy, and demand-oriented economy is first of all consumer demand. 2. Increasing consumer surplus is the essence of market economy. Socioeconomic actors are divided into producers and consumers. The position of consumers in social and economic life is triggered and decided by the modern social division of labor system. Consumer rights and interests are the inherent requirement and inevitable product of modern market economy system. Houseman believes that social interests are mainly determined by the interests of consumers. From an economic point of view, protecting consumers' rights and interests focuses on increasing consumers' surplus. It is the fundamental requirement of market economy to meet the needs of consumers and improve their economic welfare. The European Union Rome Treaty assumes that consumers are the ultimate beneficiaries of the economic goals to be achieved by the treaty. The essence of market economy is consumer sovereignty economy. This is because: the market economy is an economy where people's material and cultural needs are constantly met; Market economy is a consumer-oriented economy; Market economy is an economy of equal exchange and equal competition. In a market economy, consumers have greater voice and influence. Third, the main factors affecting consumer surplus 1. The influence of monopoly on consumer surplus. Western economics believes that monopoly leads to output reduction, resource waste and technical inefficiency. Monopoly not only transfers consumer surplus to producer surplus, but also involves manufacturing cost and tries to stop this transfer. As an organization that pursues monopoly profits, enterprises in a monopoly position will inevitably lead to lower output, higher prices, less consumer surplus and social losses. This kind of welfare loss, also called unnecessary loss, refers to the loss of actual income, or the loss of consumer surplus and producer surplus caused by monopoly, tariff, quota or other damage. The theory of industrial organization gives the proof that monopoly pricing leads to the net loss of social welfare. 2. The influence of government regulation on consumer surplus. Government regulation generally aims at safeguarding public interests, but it often deviates from this goal in practice. This is mainly because every regulatory measure is the result of a variety of power games. Olson put forward the famous "group size" theory. He believes that the government's supervision of an industry from design to implementation is based on the interests of the supervised object, not on the interests of the whole people or the public. According to the logical theory of collective action, regulatory policies protect the interests of small groups at the expense of the interests of large groups. Stigler put forward the theory of "regulated market", arguing that all regulatory arrangements are also determined by demand and supply. The process of government supervision over industries is often dominated by a few enterprises with relevant interests. In his view, economic regulation is mainly not an effective and well-intentioned response of the government to public demand, but an effort by some manufacturers in the industry to use government power to seek benefits for themselves. Pelcman (1976) believes that the industrial sector has a more active influence on government decision-making than consumers. According to the theory of private interests, supervision exists for the benefit of private groups, and regulators themselves are self-interested, and they will constantly pursue the maximization of political support in supervision activities. According to the captive theory of control, control is often "captured" by the controlled, which means that control often serves the interests of the controlled. Pezman believes that small interest groups are easier to organize than large groups, and they can show a stronger preference for a certain regulatory policy than large groups. Therefore, supervision will tend to protect small interest groups at the expense of larger groups. Kahn (1988) took the traffic supervision in the United States as an example, arguing that the more regulatory agencies, the lower the efficiency of supervision. According to Posner's estimation, the cost of government supervision of the civil aviation industry accounts for about 20% of the industry's annual turnover. 3. The impact of rent-seeking on consumer surplus. There is an internal relationship between rent-seeking and consumer surplus. Feng analyzed "looking for man-made surplus", which includes two parts, one is consumer surplus and the other is producer surplus (Feng, 1987). Parente and prescott found that if factor providers cooperate to become monopoly suppliers of downstream manufacturers, equilibrium output will achieve it with lower efficiency by using poor technology, which will make poor countries relatively poorer, and the elimination of monopoly power will increase the GDP of related industries by more than 2 times. In the transitional period, there is a special phenomenon of the integration of government and enterprise in China's state-owned enterprises. There is no equilibrium point where the government, manufacturers and consumers are satisfied, and almost all the costs are borne by consumers. 4. The impact of tax on consumer surplus. Unreasonable tax system will lead to the reduction of consumer surplus. The problem of excess burden is one of the oldest problems in western financial theory, which has been discussed by j. dupuit in his book 1844. At the beginning of the 20th century, western finance and taxation theorists began to analyze the problem of excess burden with Marshall's cardinal utility theory, thus forming the so-called Marshall-style excess burden theory. Its core is based on the theory of consumer surplus, which shows that taxation distorts the consumption choice of taxed goods and other goods, thus causing excessive burden. Arnold C. Haberger put forward the "triangle" excess burden theory in The Destination of Enterprise Income Tax (1962), and deduced it mathematically, and obtained the calculation formula to measure the excess burden under the condition of linear demand curve. 5. The impact of international trade and tariffs on consumer surplus. A country may not really benefit from trade. It is generally believed that international trade can promote competition and increase the selectivity of goods and services, thus benefiting consumers. If the benefits consumers get from products produced by foreign enterprises are greater than the losses suffered by domestic producers, that is, the increase of domestic consumers' surplus is greater than the decrease of domestic producers' surplus, then trade is beneficial. Through trade liberalization, a country can obtain products that cannot be produced due to resource or technical constraints, thus improving the domestic welfare level. The change of import tax has an impact on consumer surplus, producer surplus and social welfare profit and loss. Brand and Spencer initiated the study of strategic import trade policy. They assume that a domestic enterprise producing perfect substitutes competes with a foreign enterprise in the domestic market, so tariffs generally improve the welfare of the country. However, under the quota, the government gives some manufacturers import preferences, which enables them to make high profits. Due to the decrease of import quantity and the increase of commodity price, the decrease of consumer surplus is greater than the sum of manufacturer's excess profit and government revenue, resulting in net welfare loss. Some scholars believe that in the trade policy, tariff setting is actually harming others and benefiting themselves, which violates the Pareto standard, thus leading to the overall efficiency loss of international trade. 6. The influence of property right system on consumer surplus. Property right system has an influence on consumer surplus. North believes that the state is a discriminatory monopoly organization, and it is impossible for it to surpass various social interest groups, pursue the maximization of the whole social welfare and always provide effective property rights for the society. "Even if we make a comprehensive survey of history and the contemporary world, we can clearly see that' inefficient' property rights are normal, not accidental." In China, the welfare effect of distorted enterprise property rights is related to whether it will lead to vicious competitive pricing. Due to the distortion of the property right structure of state-owned enterprises and the weakening of consumer behavior constraints, consumer behavior constraints are "soft constraints". Some people think that there is no reason to think that public property rights must be invalid in resource allocation compared with private property rights. Generally speaking, the efficiency of private property rights is mainly manifested in maximizing the owner's surplus, but it often erodes the surplus of other resources, such as the surplus of workers or consumers. Fourth, measures to maximize consumer surplus 1. Consumer interests should be the goal of government regulatory policies. Market economy is an economic system in which the government, manufacturers and consumers participate in market operation together. Due to market failure, government supervision and intervention are necessary. Welfare economics believes that the government represents social public interests, and its basic function is to maximize social welfare. According to the theory of consumer surplus, government regulation is to increase consumer surplus. Therefore, government regulation should pay attention to the following aspects: (1) Consumer interests should be the goal of government regulation policy. Under the condition of market economy, the goal of government utility function should be to maximize government utility on the premise of maximizing social welfare. Houseman believes that the interests of consumers should be the goal of government regulatory policies. (2) Clarify the government's position and strengthen the public management function. Stiglitz summarized the economic function of the government into four main aspects: the judicial protector of the market operation order and the macroeconomic regulator. Producers and consumers of public goods, and transfer payers of national income redistribution. Among them, the supply of public goods is the most important function of government. (3) safeguard the rights and interests of consumers. In a market economy, the market is always right and consumers are always right. The function of the government is to protect the surplus of consumers. What the government needs to do is not to try to persuade consumers to accept monopoly prices, but to protect consumers' interests and realize that protecting consumers' interests is actually to protect the healthy development of the market economy. 2. Deregulate and encourage competition. Theoretically speaking, although government regulation can make up for the defects of market mechanism to some extent, there is also the problem of "government failure" in government intervention. The starting point of government regulation is to improve economic efficiency and pursue the maximization of social welfare. However, in the practice of regulation policy, there is always a big gap or even a big difference between the effect of regulation and theoretical prediction, and regulation itself will also lead to social costs. Because protective regulation attaches importance to the interests of producers and hinders the rights and interests of consumers, it leads to the rigidity of price mechanism. The experience of the United States shows that reducing regulation can bring huge economic benefits. Because of the information asymmetry between the government and producers, government regulation may not necessarily improve social welfare, and the result depends on whether the government has an advantage over enterprises in mastering information. Between the supervisor and the supervised enterprise, due to the asymmetry of information, the supervisor can only transfer his management right to the supervised enterprise, which faces an incentive and supervision problem. Barron, myerson, Lafon, Taylor, etc. Establish a mathematical model to deeply analyze the government regulation under the condition of asymmetric information. Deregulation can adjust the relationship between the government, enterprises and the market, give play to the role of market economic mechanism, and usually reduce the excess producer surplus obtained by enterprises on the basis of regulation, while increasing consumer surplus. In this sense, deregulation will make the society develop in the direction of paying more attention to the interests of consumers. Competition mechanism is the core of market mechanism, and the operation process of market economy is the competition process from beginning to end. Only through competition can we give strong stimulation to market players, urge them to reform technology, reduce costs, win competitive advantage, and then promote the technological progress and all-round development of the whole society, thus ensuring the optimal allocation of resources. This is the basic viewpoint that western economics has always adhered to. Smith does not advocate government intervention in the market, and thinks that the government should only act as the "night watchman" of the market. He believes that market competition can maximize social welfare in the process of resource allocation. "The most effective plan to make a nation rich and strong is to maintain the order of things prompted by nature, allow everyone to pursue their own interests according to their own wishes, and compete with their compatriots in the freest way with their own labor and capital." Marshall believes that only the market economy system of free competition can make people reach the best state of happiness, because only this system can make people get the biggest consumer surplus. Houseman believes that competition is more conducive to improving the interests of consumers than protecting competitors. If competition increases, the interests of consumers and social and economic interests can also be improved. Consumers can benefit from competition, because competition is conducive to more innovation and lower prices. The introduction of competition mechanism can not only improve management efficiency and reduce production costs, but also promote enterprises to improve service quality, reduce product prices and help increase consumer surplus. 3. Give play to the role of the market price mechanism. Price theory is the foundation of modern Sifang economics. Western economics believes that in a market economy, the price mechanism plays a vital role in the allocation of resources. The market coordinates the decision-making of all economic entities in the whole economy through price adjustment, so as to keep the balance between the purchase of consumers and the output of manufacturers. In the market economy, resource allocation issues such as "what to produce", "how to produce" and "for whom to produce" are all determined by the market price mechanism. The equilibrium price formed by the equilibrium of market supply and demand can guide the effective allocation of social resources and realize Pareto optimal state. In this state, the product output combination that maximizes the producer's profit coincides with the product consumption combination that maximizes the consumer's utility, thus maximizing social welfare. Lerner pointed out in Economic Theory and Socialist Economy (1934) that when the price is equal to the marginal cost, production can meet the needs of consumers to the greatest extent. According to the consumer behavior theory, the biggest condition of consumer surplus is that marginal utility equals marginal expenditure. Price competition is the basic driving force of market competition, which urges manufacturers to continuously reduce prices and improve services, and transform producer surplus into consumer surplus. Therefore, giving play to the basic role of market price mechanism can bring more producer surplus and consumer surplus. 4. Reasonable macro tax burden is an effective way to increase consumer surplus. According to the modern western financial theory, the reasonable macro tax burden is the tax scale realized according to the fiscal principle, fairness principle and efficiency principle of taxation. The most general social welfare function is Bergson-Samuelson social welfare function. 1976, Atkinson and Steele Gretz put forward the A-S theorem, arguing that the best way to realize income redistribution is to directly tax production factors such as income or labor, and it is inefficient to manipulate the relative prices of products and services to redistribute income. Newberry (1999) believes that it is better to let the tax system undertake the complex mechanism design to improve social welfare, rather than hand it over to regulators. William Vickrey pointed out in "Measuring Marginal Utility by Response to Risk" (1945) that one-sided emphasis on the common plains will hinder the basic motivation provided by the market and weaken the incentive mechanism for them to work hard. The more equal the after-tax income, the greater the negative effect. In the late 1960s, James Mirlis put forward a solution to the problem raised by Vickery. He believes that a perfect tax system must be an "incentive-compatible" system, and it must motivate people to show their real productivity by choosing the degree of their work. The theory of public choice school holds that under the premise of correctly evaluating the demand preference of social members for public goods, the government can determine the tax rate according to the principle of maximizing social welfare, and whoever gets a high level of utility from the consumption of public goods will pay more taxes. Jones -True Wild model holds that the government's tax policy will generally distort the economy, make the competitive equilibrium no longer the social optimum, and cause the loss of social welfare; The government should reduce taxes to promote economic growth. 5. Establish the concept of consumer first. The development of market economy depends largely on the development of consumer market. The relationship between enterprises and consumers is that the interests of consumers are above everything else. As the starting point and end point of social reproduction process, production and consumption are interdependent and interact, which determines the relationship between enterprises and consumers. Under the condition of market economy, enterprises and consumers not only compete on an equal footing, but also can be said that the interests and survival of enterprises are determined by consumers, and the dependence of enterprises on the market is actually the dependence on consumers. The purpose of social production is to meet people's growing material and cultural needs, that is, consumer demand and consumer demand. The main task of producers and operators is ultimately to serve people's consumption needs and consumers. If the government and manufacturers increase producer surplus at the expense of consumer surplus, it will completely deviate from the purpose of social production.