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Quasi-linear peferences with Auspitz-Lieben-Pareto complementarity

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  • Christian Weber

    ()
    (Seattle University)

Abstract

I show that if preferences are quasi-linear (non-linear in goods x1, …, xn but linear in xn+1) and the sub-utility function defined over [x1, …, xn] is strongly concave and exhibits Auspitz-Lieben-Pareto complementarity, then goods x1-xn must be gross and compensated complements for each other and xn+1 must be a compensated substitute for all other goods. Also, an increase in its price of xn+1 must reduce the demand for goods x1-xn. The effects of uncompensated changes in the prices of goods x1-xn on the demand for good xn+1 vary predictably with income.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 4 (2004)
Issue (Month): 12 ()
Pages: 1-5

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Handle: RePEc:ebl:ecbull:eb-04d10001

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Keywords: Auspitz-Lieben-Pareto complementarity;

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  1. Christian E. Weber, 2005. "Edgeworth on Complementarity, or Edgeworth, Auspitz-Lieben, and Pareto De-Homogenized," History of Political Economy, Duke University Press, vol. 37(2), pages 293-307, Summer.
  2. Chipman, John S., 1977. "An empirical implication of Auspitz-Lieben-Edgeworth-Pareto complementarity," Journal of Economic Theory, Elsevier, vol. 14(1), pages 228-231, February.
  3. Weber, Christian E., 2000. "Two further empirical implications of Auspitz-Lieben-Edgeworth-Pareto complementarity," Economics Letters, Elsevier, vol. 67(3), pages 289-295, June.
  4. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, December.
  5. Silberberg, Eugene, 1972. "Separability and Complementarity," American Economic Review, American Economic Association, vol. 62(1), pages 196-97, March.
  6. Weymark, John A, 1987. "Comparative Static Properties of Optimal Nonlinear Income Taxes," Econometrica, Econometric Society, vol. 55(5), pages 1165-85, September.
  7. Che, Yeon-Koo & Gale, Ian, 2000. "The Optimal Mechanism for Selling to a Budget-Constrained Buyer," Journal of Economic Theory, Elsevier, vol. 92(2), pages 198-233, June.
  8. Shi, Shou Yong, 1988. "Rational expectation equilibrium under quasilinear preferences : A diagrammatic approach," Economics Letters, Elsevier, vol. 26(2), pages 107-110.
  9. Liebhafsky, H H, 1969. "New Thoughts About Inferior Goods," American Economic Review, American Economic Association, vol. 59(5), pages 931-34, December.
  10. Boylan, Richard T., 1998. "Coalition-Proof Implementation," Journal of Economic Theory, Elsevier, vol. 82(1), pages 132-143, September.
  11. Shi, Shou Yong, 1988. "Rothschild-Stiglitz competitive insurance market under quasilinear preferences," Economics Letters, Elsevier, vol. 27(1), pages 27-30.
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