Quasi-linear peferences with Auspitz-Lieben-Pareto complementarity
AbstractI 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 InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 4 (2004)
Issue (Month): 12 ()
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- D1 - Microeconomics - - Household Behavior
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