IDEAS home Printed from https://ideas.repec.org/p/mos/moswps/2023-19.html
   My bibliography  Save this paper

Is Producer Surplus a Surplus to the Producer?

Author

Listed:
  • Wenli Cheng

    (Department of Economics, Monash University)

Abstract

This paper clarifies the concept of producer surplus in the short-run and the long-run contexts. It shows that in the short run, producer surplus is the sum of economic profit (or loss) to the firm and quasi-rent which goes to owners of fixed factors. In the long run, producer surplus is rent, which goes to owners of specialised factors of production. In either case, producer surplus is not necessarily a surplus to the producer which is commonly understood to be the firm.

Suggested Citation

  • Wenli Cheng, 2023. "Is Producer Surplus a Surplus to the Producer?," Monash Economics Working Papers 2023-19, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2023-19
    as

    Download full text from publisher

    File URL: http://monash-econ-wps.s3-ap-southeast-2.amazonaws.com/RePEc/mos/moswps/2023-19.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Johnson, Ronald N & Libecap, Gary D, 1982. "Contracting Problems and Regulation: The Case of the Fishery," American Economic Review, American Economic Association, vol. 72(5), pages 1005-1022, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Matthew Turner & Quinn Weninger, 2005. "Meetings with Costly Participation: An Empirical Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(1), pages 247-268.
    2. Hayo, Bernd & Vollan, Björn, 2012. "Group interaction, heterogeneity, rules, and co-operative behaviour: Evidence from a common-pool resource experiment in South Africa and Namibia," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 9-28.
    3. De Janvry, Alain & Sadoulet, Elisabeth & Murgai, Rinku, 2002. "Rural development and rural policy," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 31, pages 1593-1658, Elsevier.
    4. Petros G. Sekeris & Kevin Siqueira, 2021. "Payoff-Improving Competition: Games with Negative Externalities," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(3), pages 455-474, May.
    5. Brett M. Frischmann & Alain Marciano & Giovanni Battista Ramello, 2019. "Retrospectives: Tragedy of the Commons after 50 Years," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 211-228, Fall.
    6. Costello, Christopher J & Deacon, Robert T, 2007. "The Efficiency Gains from Fully Delineating Rights in an ITQ Fishery," University of California at Santa Barbara, Economics Working Paper Series qt56n8x9qb, Department of Economics, UC Santa Barbara.
    7. Gunnarsson, Victoria & Orazem, Peter & Sanchez, Mario A. & Verdisco, Aimee, 2004. "Does Local School Control Raise Student Outcomes?: Theory and Evidence on the Roles of School Autonomy and Community Participation," Staff General Research Papers Archive 11417, Iowa State University, Department of Economics.
    8. Martin D. Smith & Larry B. Crowder, 2011. "Valuing Ecosystem Services with Fishery Rents: A Lumped-Parameter Approach to Hypoxia in the Neuse River Estuary," Sustainability, MDPI, vol. 3(11), pages 1-39, November.
    9. Carlisle Ford Runge, 1985. "The Innovation of Rules and the Structure of Incentives in Open Access Resources," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(2), pages 368-372.
    10. Sethi, Gautam & Costello, Christopher & Fisher, Anthony & Hanemann, Michael & Karp, Larry, 2005. "Fishery management under multiple uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 50(2), pages 300-318, September.
    11. Tarui, Nori, 2007. "Inequality and outside options in common-property resource use," Journal of Development Economics, Elsevier, vol. 83(1), pages 214-239, May.
    12. Elinor Ostrom, 2010. "Analyzing collective action," Agricultural Economics, International Association of Agricultural Economists, vol. 41(s1), pages 155-166, November.
    13. Berck, Peter & Costello, Christopher, 2000. "Overharvesting the traditional fishery with a captured regulator," CUDARE Working Papers 43915, University of California, Berkeley, Department of Agricultural and Resource Economics.
    14. Oses-Eraso, Nuria & Viladrich-Grau, Montserrat, 2007. "On the sustainability of common property resources," Journal of Environmental Economics and Management, Elsevier, vol. 53(3), pages 393-410, May.
    15. Steven Hackett & Dean Dudley & James Walker, 1994. "5. Heterogeneities, Information and Conflict Resolution: Experimental Evidence on Sharing Contracts," Journal of Theoretical Politics, , vol. 6(4), pages 495-525, October.
    16. Matthew N. Reimer & Joshua K. Abbott & James E. Wilen, 2014. "Unraveling the Multiple Margins of Rent Generation from Individual Transferable Quotas," Land Economics, University of Wisconsin Press, vol. 90(3), pages 538-559.
    17. Ayres, Andrew B. & Edwards, Eric C. & Libecap, Gary D., 2018. "How transaction costs obstruct collective action: The case of California's groundwater," Journal of Environmental Economics and Management, Elsevier, vol. 91(C), pages 46-65.
    18. Nancy McCarthy & Talip Kilic, 2015. "The nexus between gender, collective action for public goods and agriculture: evidence from Malawi," Agricultural Economics, International Association of Agricultural Economists, vol. 46(3), pages 375-402, May.
    19. Jeena T Srinivasan, 2005. "The Differential Impact of User Heterogeneity in Resource Management : A Case Study from Kerala," Microeconomics Working Papers 22411, East Asian Bureau of Economic Research.
    20. Hoddinott, John, 2011. "Agriculture, health, and nutrition: Towards conceptualizing the linkages," 2020 conference papers 2, International Food Policy Research Institute (IFPRI).

    More about this item

    Keywords

    Producer surplus; profit; rent;
    All these keywords.

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mos:moswps:2023-19. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Simon Angus (email available below). General contact details of provider: https://edirc.repec.org/data/dxmonau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.