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The Substitution and the Revenue Effects for a Cobb-Douglas Utility Function

Author

Listed:
  • Catalin Angelo IOAN

    (Danubius University, Galati, Romania)

  • Gina IOAN

    (Danubius University, Galati, Romania)

Abstract

In the consumer’s theory, a crucial problem is to determine the substitution effect and the revenue effect in the case of one good price’s modifing. There exists two theories due to John Richard Hicks and Eugen Slutsky which allocates differents shares of the total change of the consumption to these effects. The paper makes an analysis between the two effects, considering the general case of a Cobb-Douglas utility function and introduces three indicators which will characterize these shares.

Suggested Citation

  • Catalin Angelo IOAN & Gina IOAN, 2010. "The Substitution and the Revenue Effects for a Cobb-Douglas Utility Function," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 2, pages 87-94.
  • Handle: RePEc:ddj:fseeai:y:2010:i:2:p:87-94
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    File URL: http://www.ann.ugal.ro/eco/Doc2010_2/Ioan_Ioan.pdf
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    Citations

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    Cited by:

    1. Catalin Angelo Ioan, 2012. "Considerations on the Hicks Effect for N Consumer’s Goods," EuroEconomica, Danubius University of Galati, issue 2(31), pages 116-126, May.

    More about this item

    Keywords

    Cobb-Douglas; substitution; revenue; utility;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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