<p>When micro-economists refer to "social welfare" as measure of an outcome of a competitive equilibrium economic model, or "welfare economics" in general, is this taken to include a measure of the supply side's "welfare" too? Every description of this term / concept that I've found leaves room for doubt.</p>

<p>I mean Production side is part of a society and part of the economic models of societies. They have an objective and a payoff for participating in the economy. So why shouldn't their welfare be included? </p>

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2018-02-03T06:56:20.493Z
"Every description of this term / concept that I've found leaves room for doubt." Dig a little deeper, perhaps using the word surplus.
Giskard
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2018-02-03T07:33:54.263Z
@denesp I know that surplus includes the concept of producer and consumer surplus. I know that a result of *partial* competitive equilibrium (under certain conditions) maximizes aggregate consumer and producer surplus. And that surplus is a measure of ~payoff for both consumer and producer, similar to welfare. In my mind I've been thinking of aggregate "surplus" (consumer AND producer), and aggregate "social welfare" as roughly equivalent. But then ... I had reason for doubt, and as far as I've seen the connection isn't made, at least not clearly.
spinkus
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2018-02-03T10:46:47.127Z
Oh, I think I have my answer: In an exchange economy, there is only consumers, so it makes sense to only talk about welfare of consumers. In a production economy all firms are actually owned by consumers. All of the profit gets feed back to consumers who use the profit to maximize their utility. There *are no real "production"* entities who's goal in life is to maximize profit. Not in the classical Walrasian model anyway.
spinkus
CC BY-SA 3.0
2018-02-03T11:03:54.927Z
Your question does not contain the word "exchange economy" but I am glad you got your answer. Please try to post clearer questions in the future.
Giskard
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2018-02-03T11:07:19.067Z
What I'm saying is it doesn't matter whether it's an exchange economy or a production economy, because when it all boils down the only agents that exist in both models (at least the classical Walrasian one's I'm reading about) are consumers. There is no "production" side, only "firms" owned and operated by consumers.
spinkus
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2018-02-03T11:37:51.920Z
As opposed to real world production were firms are owned by horses and operated by dogs? Again, in the future please try to make your question and the framework you are asking it in clearer.
Giskard
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2018-02-03T11:48:21.320Z
No, more like owned by Scrooge McDucks that eat money. But OK I will. Thanks for your help.
spinkus
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2018-02-04T01:23:22.187Z
Your question is clear enough for me.
Yes
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2020-01-21T17:43:15.610Z
Why would "supply-side welfare" be relevant *other than* to the extent the supply of various items influences their availability by consumers? If your policy decreases the amount of stuff available to be consumed, that people want to consume, then it's decreased social welfare. In other words, how isn't it already taken into account?
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<microeconomics><social-welfare>
Is production side (or so called "firms") considered in "social welfare"?
spinkus
# Is production side (or so called "firms") considered in "social welfare"?

(Asked by: username_0 on 2018-02-03)

When micro-economists refer to "social welfare" as measure of an outcome of a competitive equilibrium economic model, or "welfare economics" in general, is this taken to include a measure of the supply side's "welfare" too? Every description of this term / concept that I've found leaves room for doubt.

I mean Production side is part of a society and part of the economic models of societies. They have an objective and a payoff for participating in the economy. So why shouldn't their welfare be included?

**Tags:** microeconomics, social-welfare

> **Comments:**
> **username_1**: "Every description of this term / concept that I've found leaves room for doubt." Dig a little deeper, perhaps using the word surplus.  
> **username_0**: @denesp I know that surplus includes the concept of producer and consumer surplus. I know that a result of *partial* competitive equilibrium (under certain conditions) maximizes aggregate consumer and producer surplus. And that surplus is a measure of ~payoff for both consumer and producer, similar to welfare. In my mind I've been thinking of aggregate "surplus" (consumer AND producer), and aggregate "social welfare" as roughly equivalent. But then ... I had reason for doubt, and as far as I've seen the connection isn't made, at least not clearly.  
> **username_0**: Oh, I think I have my answer: In an exchange economy, there is only consumers, so it makes sense to only talk about welfare of consumers. In a production economy all firms are actually owned by consumers. All of the profit gets feed back to consumers who use the profit to maximize their utility. There *are no real "production"* entities who's goal in life is to maximize profit. Not in the classical Walrasian model anyway.  
> **username_1**: Your question does not contain the word "exchange economy" but I am glad you got your answer. Please try to post clearer questions in the future.  
> **username_0**: What I'm saying is it doesn't matter whether it's an exchange economy or a production economy, because when it all boils down the only agents that exist in both models (at least the classical Walrasian one's I'm reading about) are consumers. There is no "production" side, only "firms" owned and operated by consumers.  
> **username_1**: As opposed to real world production were firms are owned by horses and operated by dogs? Again, in the future please try to make your question and the framework you are asking it in clearer.  
> **username_0**: No, more like owned by Scrooge McDucks that eat money. But OK I will. Thanks for your help.  
> **username_2**: Your question is clear enough for me.  
> **username_3**: Why would "supply-side welfare" be relevant *other than* to the extent the supply of various items influences their availability by consumers? If your policy decreases the amount of stuff available to be consumed, that people want to consume, then it's decreased social welfare. In other words, how isn't it already taken into account?  

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