consumer surplus

(19th-20th century)

Identified by French engineer and economist Jules Dupuit (1804-1866) and later developed by English economist Alfred Marshall (1842-1924), consumer surplus theory assumes that the price paid by consumers for a good never exceeds and seldom equals the amount they are willing to pay rather than forgo the good.

The satisfaction derived from the good is greater than that derived from products given up in making the purchase; thus, the consumer receives a surplus in satisfaction in excess of the price paid for the good.

Also see: cost benefit analysis, price discrimination, social welfare function, compensation principle

Source:
A Marshall, Principles of Economics (London, 1890);
A Bergson, 'A Note on Consumer's Surplus', Journal of Economic Literature, vol. XIII (1975), 38-44

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