THE EFFECTS OF SUPPLY SHIFTS ON PRODUCERS SURPLUS

Changes in the supply curve caused by technological improvements in production or changes in national policy may or may not benefit producers as a whole, depending on the type of shift in the supply curve. Different changes in the supply curve that model this situation are studied and the change in producers surplus is examined depending on quantitative aspects of the supply and demand curves. It is shown that for supply and demand curves that are linear or power functions, a small downward pivot of the supply curve will increase producers surplus only if the equilibrium point is far enough into the elastic region of the demand curve, and any downward pivot of the supply curve will decrease producers surplus if the equilibrium point is in the inelastic region of the demand curve. Similar results are obtained for the more general case of convex supply and demand curves.


Issue Date:
Aug 02 1987
Publication Type:
Conference Paper/ Presentation
Record Identifier:
http://ageconsearch.umn.edu/record/270116
Language:
English
Total Pages:
19




 Record created 2018-03-28, last modified 2018-03-28

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