The Social Benefits from an Increase in Productivity in a Part of an Industry

Productivity often increases in a part of an industry while remaining unchanged in the rest of the industry. In assessing the social gain from a productivity increase in a part of an industry producing a tradeable commodity it is necessary to consider the relationships between the part of the industry affected, the industry in the rest of the country concerned and the industry in the rest of the world. In this paper an attempt to assess the social benefits of serrated tussock control on the tablelands of New South Wales is critically reviewed and found wanting. An analytical framework is outlined that is conceptually appropriate to that task, and to other situations where cost per unit of output is reduced in a part of an industry. The social gains from the control of serrated tussock on the New South Wales tablelands are recalculated. A discussion is also presented of some issues in the distribution of the gains from research.