Can weak substitution be rehabilitated?
This paper develops a graphical analysis and an analytical model that demonstrate how weak substitution can be used for non-market valuation. Weak complementarity and weak substitution represent preference restrictions that allow us to develop equivalent price changes to describe quantity or quality changes in non-market goods. The price changes are Hicksian equivalents in that they yield the same utility changes as would the quantity or quality changes. After discussion of several potential applications of weak substitution, the paper develops the parallel between the restriction and recent strategies from modeling differentiated goods.
Smith, VK., Evans, MF., Banzhaf, HS., & Poulos, C. (2010). Can weak substitution be rehabilitated? Environmental & Resource Economics, 45(2), 203-221. DOI: 10.1007/s10640-009-9312-6