Welfare measurement in single and multimarket models: Theory and application

In this paper we provide an analysis of tax reforms along the lines of the multimarket welfare measurement techniques suggested by Just, Hueth, and Schmitz. A key purpose of our analysis is to shed light on the approximating features of partial equilibrium models. We derive a result on the difference between single and multimarket welfare measurement, showing how the difference boils down to a set of key parameters. We use our approach to analyze a proposal put forward by the Swedish Commission of Environmental Charges regarding chlorine emissions from the Swedish pulp and paper industry.