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Dynamic cost-benefit analysis of large projects: The role of capital cost

Author

Listed:
  • Li, Chuan-Zhong

    (Department of Economics)

  • Löfgren, Karl-Gustaf

    (Umeå University)

Abstract

This paper derives a dynamic cost-bene…t rule for evaluating large projects.We show that, in addition to the conventional income and consumer surplus measures, the rule also entails an extra term involving capital cost changes.

Suggested Citation

  • Li, Chuan-Zhong & Löfgren, Karl-Gustaf, 2010. "Dynamic cost-benefit analysis of large projects: The role of capital cost," Working Paper Series 2010:15, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uunewp:2010_015
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    References listed on IDEAS

    as
    1. Avinash Dixit & Peter Hammond & Michael Hoel, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(3), pages 551-556.
    2. Kenneth Arrow & Partha Dasgupta & Karl-Göran Mäler, 2003. "Evaluating Projects and Assessing Sustainable Development in Imperfect Economies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(4), pages 647-685, December.
    3. Asheim, Geir B., 2000. "Green national accounting: why and how?," Environment and Development Economics, Cambridge University Press, vol. 5(1), pages 25-48, February.
    4. Dreze, Jean & Stern, Nicholas, 1987. "The theory of cost-benefit analysis," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 14, pages 909-989, Elsevier.
    5. Martin L. Weitzman, 2001. "A Contribution to the Theory of Welfare Accounting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(1), pages 1-23, March.
    6. repec:bla:germec:v:9:y:2008:i::p:1-16 is not listed on IDEAS
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    Cited by:

    1. Collins, Ross D. & Selin, Noelle E. & de Weck, Olivier L. & Clark, William C., 2017. "Using inclusive wealth for policy evaluation: Application to electricity infrastructure planning in oil-exporting countries," Ecological Economics, Elsevier, vol. 133(C), pages 23-34.

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    More about this item

    Keywords

    cost-benefit rule; large project; capital cost;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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