contrsum

Contrsum is a theoretical metric used in welfare economics to represent the total value accruing to consumers from price arrangements and contractual transfers within a market. The term is a portmanteau of contract and sum, reflecting its role in combining standard consumer surplus with transfers tied to contractual terms. In typical models, contrsum is defined as the sum of consumer surplus (the area under the demand curve above the price) plus net transfers to consumers from subsidies, rebates, loyalty discounts, and other contract-based benefits. Some formulations separate public transfers from private agreements, in which case contrsum equals CS plus net consumer-directed transfers.

The metric is used to compare welfare outcomes across policy options, such as price controls, subsidy schemes, or long-term contracting, by aggregating effects that would otherwise be measured separately as surplus and transfers. In practice, contrsum can be sensitive to assumptions about demand elasticity, the structure of contracts, and whether transfers are financed publicly or privately.

Critics note that contrsum, while intuitively appealing, can obscure distributional details and complicate cross-country comparisons if transfer definitions differ. Proponents argue it provides a compact summary of consumer-affecting incentives in contract-rich markets.

See also: consumer surplus, welfare economics, price subsidies, contract theory.