| Abstract: | This paper demonstrates how profit and expenditure functions may be used to prove fundamental results about deadweight losses suffered by consumers, producers, and resource owners. Losses arising from excise taxes and subsidies are examined and, in the case of a tax, the individual level analysis is extended to the market level in a partial equilibrium setting. In addition, profit and expenditure functions are applied to quantity constraints, two-part tariffs, all-or-nothing choices, and reservation prices. Although no new results are derived, the paper provides motivation for the study of indirect objective functions and duality. |
