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Glossary Environmental Economics / Term

Compensating Variation

The amount of money one would pay to gain a benefit such as a price decrease or the amount of income one would accept to agree upon the imposition of a harm such as a price increase. Money required to leave an individual as well off as before the economic change. Amount an individual would be willing to pay for the change, or willing to accept as compensation for a change.

Permanent link Compensating Variation - Creation date 2020-04-19


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