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Linearity, Slutsky symmetry, and a conjecture of Hicks

Author

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  • Christian Weber

    (Seattle University)

Abstract

Hicks (1956) conjectured that Slutsky symmetry should hold for discrete as well as infinitesimal price changes if demand functions are globally linear. This paper proves this conjecture using the LES utility function and the Slutsky compensation for price changes. More importantly, in sharp contrast to previous doubts expressed by Hicks, Samuelson and others, this paper provides the first formal demonstration that compensated cross price effects can indeed be symmetric for discrete changes in prices.

Suggested Citation

  • Christian Weber, 2002. "Linearity, Slutsky symmetry, and a conjecture of Hicks," Economics Bulletin, AccessEcon, vol. 4(12), pages 1-5.
    • Handle: RePEc:ebl:ecbull:eb-02d10008
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    File URL: http://www.accessecon.com/pubs/EB/2002/Volume4/EB-02D10008A.pdf
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    Cited by:

    1. Haradhan Kumar Mohajan, 2017. "Analysis of Reciprocity and Substitution Theorems, and Slutsky Equation," Noble International Journal of Economics and Financial Research, Noble Academic Publsiher, vol. 2(3), pages 54-75, March.
    2. Robert Sproule & Ambrose Leung, 2007. "Using the compensating and equivalent variations to define the Slutsky Equation under a discrete price change," Economics Bulletin, AccessEcon, vol. 4(11), pages 1-9.

    More about this item

    JEL classification:

    • D1 - Microeconomics - - Household Behavior

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