Individual consumer surplus in the Edgeworth Box

Abstract

Subject. The consumer surplus conception is an important part of the modern microeconomic theory at the introductory and intermediate levels. Consumer surplus measures the change in the consumer’s real welfare. The article addresses the peculiarities of generation and the main property of the generalized individual consumer surplus, using the Edgeworth Box case. Objectives. The purpose is to find the main property of individual consumer surplus in the Edgeworth Box economy. Methods. The study draws on methods of logical and mathematical analysis. The generalized consumer surplus is correctly constructed, using the mathematical theory of curve integrals of the second type (the theory of line integrals in the Western mathematics). Results. The generalized individual consumer surplus is defined through the respective curve integral along some admissible trajectory in the simple exchange economy (Edgeworth Box). The paper also introduces the notion of the marginal individual consumer surplus, and demonstrates that consumer surplus is a correct individual welfare measure in the Edgeworth Box, and that consumer surplus is zero along any given indifference curve. I consider the numerical example of individual surplus calculation and presentation in the Edgeworth Box. Conclusions. The generalized individual consumer surplus is a correct measure of consumer’s utility change along monotone (weakly monotone) trajectories in the Edgeworth Box. Geometrically, the consumer surplus is presented as an area limited by the reservation price curve from the top and by the reallocation line (curve) from the bottom.