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The Substitution Effect from the Profit Function in Consumption: Expressions from the Marshallian, Hicksian, and Frischian demand functions

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  • José Ignacio Gimenez-Nadal

Abstract

In the context of the optimizing behaviour assumption of individuals (Becker, 1976), three types of demand functions appear: Marshallian, Hicksian, and Frischian functions (Sproule, 2013). The Substitution Effect (SE) is a relevant concept, with our short paper developing two alternative theoretical expressions, specifically focusing on the Profit Function in Consumption and the Frischian functions. I address the fact that these demand functions with constant marginal utility of income play a very relevant role in the inter-temporal context.

Suggested Citation

  • José Ignacio Gimenez-Nadal, 2018. "The Substitution Effect from the Profit Function in Consumption: Expressions from the Marshallian, Hicksian, and Frischian demand functions," Economics and Business Letters, Oviedo University Press, vol. 7(3), pages 92-97.
    • Handle: RePEc:ove:journl:aid:12773
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    File URL: https://reunido.uniovi.es/index.php/EBL/article/view/12773
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    1. Altonji, Joseph G, 1986. "Intertemporal Substitution in Labor Supply: Evidence from Micro Data," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 176-215, June.
    2. Ashenfelter, Orley & Heckman, James J, 1974. "The Estimation of Income and Substitution Effects in a Model of Family Labor Supply," Econometrica, Econometric Society, vol. 42(1), pages 73-85, January.
    3. Manoli, Dayanand & Weber, Andrea, 2010. "Intertemporal Substitution in Labor Force Participation: Evidence from Policy Discontinuities," IZA Discussion Papers 5248, Institute of Labor Economics (IZA).
    4. Sproule, Robert, 2013. "A systematic analysis of the links amongst the Marshallian, Hicksian, and Frischian demand functions: A note," Economics Letters, Elsevier, vol. 121(3), pages 555-557.
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