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Market Demand Elasticity and Income Inequality

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  • Ibragimov, Rustam
  • Ibragimov, Marat
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    Abstract

    This paper deals with the analysis of the relation between aggregate demand for a consumption good and the distribution of income across consumers. We obtain sufficient conditions under which changes in income inequality lead to an increase or decrease in the market demand elasticities. The conditions are satisfied for individual demand functions commonly used in economic models, in particular, for the typical demand functions on luxury goods and necessities.

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    File URL: http://dash.harvard.edu/bitstream/handle/1/2623728/ibragimov_market%20demand.pdf
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    Bibliographic Info

    Paper provided by Harvard University Department of Economics in its series Scholarly Articles with number 2623728.

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    Date of creation: 2007
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    Publication status: Published in Economic Theory
    Handle: RePEc:hrv:faseco:2623728

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    3. Basu, Kaushik, 1987. "Axioms for a fuzzy measure of inequality," Mathematical Social Sciences, Elsevier, vol. 14(3), pages 275-288, December.
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    19. Hennessy, David A. & Lapan, Harvey E., 2003. "Algebraic Theory of Portfolio Allocation, An," Staff General Research Papers 10109, Iowa State University, Department of Economics.
    20. Le Breton, Michel & Moyes, Patrick & Trannoy, Alain, 1996. "Inequality Reducing Properties of Composite Taxation," Journal of Economic Theory, Elsevier, vol. 69(1), pages 71-103, April.
    21. Gerhard Sorger, 2000. "Income and wealth distribution in a simple model of growth," Economic Theory, Springer, vol. 16(1), pages 23-42.
    22. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
    23. Saposnik, Rubin, 1993. "A note on majorization theory and the evaluation of income distributions," Economics Letters, Elsevier, vol. 42(2-3), pages 179-183.
    24. Thon, Dominique, 1987. "Redistributive properties of progressive taxation," Mathematical Social Sciences, Elsevier, vol. 14(2), pages 185-191, October.
    25. Philippe Aghion, 2002. "Schumpeterian Growth Theory and the Dynamics of Income Inequality," Econometrica, Econometric Society, vol. 70(3), pages 855-882, May.
    26. John L. Park & Rodney B. Holcomb & Kellie Curry Raper & Oral Capps, 1996. "A Demand Systems Analysis of Food Commodities by U.S. Households Segmented by Income," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 290-300.
    27. Eichhorn, Wolfgang & Funke, Helmut & Richter, Wolfram F., 1984. "Tax progression and inequality of income distribution," Journal of Mathematical Economics, Elsevier, vol. 13(2), pages 127-131, October.
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    Cited by:
    1. Marat Ibragimov & Rustam Ibragimov & Rufat Khamidov, 2010. "Measuring Inequality in CIS Countries: Theory and Empirics," The wiiw Balkan Observatory Working Papers 088, The Vienna Institute for International Economic Studies, wiiw.
    2. Hennessy, David A. & Lapan, Harvey E., 2006. "Harmonic Symmetries of Imperfect Competition on Circular City," Staff General Research Papers 12551, Iowa State University, Department of Economics.

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