Convergence theorems of willingness-to-pay and willingness-to-accept for nonmarket goods

Abstract

This paper shows that the disparity between an agent's willingness-to-pay and willingness-to-accept for a nonmarket good becomes small and the two values converge to the same limit only if the agent's initial consumption level of the numéraire is large enough. A necessary and sufficient condition for convergences is provided, and a formula is provided to compute the limit value directly from a utility function. These convergence results are derived when the nonmarket goods are indivisible and qualitatively differentiated, and then extended for the divisible case. © The Author(s) 2009.