Andrew Schmitz Knihy

The idea for this book began in Sofia, Bulgaria in September, 1992 when we met to plot a course for our University Affiliations project which had been recently funded by the U.S. Infonnation Agency. We believed that worldng on the book would provide valuable learning experiences for all the cooperators, and that the book itself would make a useful contribution to understanding the economic transition process and its policy implications. We recognized that a project of this nature would require the skills and knowledge of many people. To those 34 additional contributors to this volume, and to the many other friends, colleagues, and experts who gave generous advice, we give our sincerest thanks. We also acknowledge with thanks the support of several organizations to a reality. Much of the that transfonned this book from an idea research reported here was a major part of an educational project funded by the University Affiliations Program of the U.S. Information Agency. The project linked the University of California, Berkeley, Wye College of London University, and the Research Institute of Agricultural Economics, Sofia, in a cooperative effort to improve the quality of policy analysis. The research provided hands-on experience necessary for effective teaching in this area.

Behind the statistical facts of international trade are the institutions and policymakers that shape performance in the international marketplace. But even though trading outcomes are a matter of record, for most nations very little is known about the institutional and policy frameworks that determine a nation's success or failure.

This outstanding text, a follow-up to the authors' award-winning 1982 text, provides a thorough treatment of economic welfare theory and develops a complete theoretical and empirical framework for applied project and policy evaluation. The authors illustrate how this theory can be used to develop policy analysis from both theory and estimation in a variety of areas including: international trade, the economics of technological change, agricultural economics, the economics of information, environmental economics, and the economics of extractive and renewable natural resources. Building on willingness-to-pay (WTP) measures as the foundation for applied welfare economics, the authors develop measures for firms and households where households are viewed as both consumers and owner/sellers of resources. Possibilities are presented for approximating WTP with consumer surplus, measuring WTP exactly subject to errors in existing econometric work, and using duality theory to specify econometric equations consistent with theory