Heterotic Models of Aggregate Demand
AbstractA common theme in the theory of demand aggregation is that market demand can acquire properties which are not always individually present among the agents who make up that market, a phenomenon we call heterosis in this paper. This paper focusses on the well known result that with a suitable distribution of demand behavior (arising perhaps from the underlying distribution of preferences), market demand can become approximately a linear function of income or even taken an approximate Cobb-Douglas properties. We highlight the mathematical arguments underpinning these models and show that in the right context, it is possible to carry the arguments further and achieve exact rather than just approximate results: exact Cobb-Douglas market demand or exact linearity of market demand with respect to income.
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Bibliographic InfoPaper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 2002-W18.
Length: 25 pages
Date of creation: 01 Jul 2002
Date of revision:
Contact details of provider:
Web page: http://www.nuff.ox.ac.uk/economics/
heterosis; heterogeneity; Cobb-Douglas; homotheticity; law of demand; aggregation;
Other versions of this item:
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-07-31 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michael Jerison, 1998.
"Dispersed Excess Demands, the Weak Axiom and Uniqueness of Equilibrium,"
98-03, University at Albany, SUNY, Department of Economics.
- Jerison, Michael, 1999. "Dispersed excess demands, the weak axiom and uniqueness of equilibrium," Journal of Mathematical Economics, Elsevier, vol. 31(1), pages 15-48, February.
- Gael Giraud & Isabelle Maret, 2001.
"Behavioral Heterogeneity in Large Economies,"
Working Papers of BETA
2001-08, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
- John Quah, 2001.
"Demand is heterogenous in grandmonts model,"
2001-W12, Economics Group, Nuffield College, University of Oxford.
- John K.-H. Quah, 1997. "The Law of Demand when Income Is Price Dependent," Econometrica, Econometric Society, vol. 65(6), pages 1421-1442, November.
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