A Method for Evaluation of Social Benefits —— General Equilibrium Model of External Economies with Technological Propagation Effects ——

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  • 社会的便益の評価手法に関する研究 —— 技術的伝播拡散の外部性を考慮した一般均衡モデルを用いて ——
  • シャカイテキ ベンエキ ノ ヒョウカ シュホウ ニ カンスル ケンキュウ ギジュツテキ デンパ カクサン ノ ガイブセイ オ コウリョ シタ イッパン キンコウ モデル オ モチイテ

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Abstract

Social benefit is a term to measure the social usefulness of public investments. Benefits are direct or indirect benefits that are classified into origin based benefits or incidence based benefits. The social benefits are generally calculated based on the incidence benefits. In this paper, we assume a closed economy and analyze whether benefits based on the incidence are greater than those based on the origin. The external economies are Marshallian type and regarded as factory scale enlargement effects. In this study, other types of external economies called technological propagation and dispersion effects are introduced.<br> A general equilibrium model is constructed. There are n industries and each firm or industry produces goods from intermediate goods and labor. Each firm in an industry faces an identical production technology and there is a market price for the industrial goods of each firm. Each firm can choose a different production technology without any additional costs. Each firm has decreasing returns to scale and the profit of each firm in the same industry attains an equilibrium level. Identical households are assumed. The household sector maximizes its utility subject to income and the subsidy system is introduced when the solution is a social optimum.<br> We compared two kinds of benefits to a large-scale project, origin based and incidence based, with the technological propagation effects of Marshallian external economies by using partial and general equilibrium models. In our numerical simulation, two types of industrial structures were set up. In both the market equilibrium and the social optimum, two kinds of benefits were calculated by changing the parameters of the externalities of technological propagation and dispersion effects. We showed it is important to measure the benefits based on incidence, especially if technological propagation and dispersion effects exist in the economy. We also showed that in the social optimum the incidence based benefits become more important.<br><br>JEL Classification: O33, R1, R4

Journal

  • Studies in Regional Science

    Studies in Regional Science 40 (1), 73-94, 2010

    JAPAN SECTION OF THE REGIONAL SCIENCE ASSOCIATION INTERNATIONAL

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