Home > Term: compensating variation
compensating variation
An amount of money that just compensates a person, group, or whole economy, for the welfare effects of a change in the economy, thus providing a monetary measure of that change in welfare. Same as willingness to pay. Contrasts with equivalent variation.
- Part of Speech: noun
- Industry/Domain: Economy
- Category: International economics
- Company: University of Michigan
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Creator
- Noroc
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