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Heterotic Models of Aggregate Demand

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  • John Quah
  • Gael Giraud

Abstract

A 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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File URL: http://www.nuff.ox.ac.uk/economics/papers/2002/w18/hlp12.pdf
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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 2002-W18.

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Date of creation: 01 Jul 2002
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Handle: RePEc:oxf:wpaper:2002-w18

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Keywords: heterosis; heterogeneity; Cobb-Douglas; homotheticity; law of demand; aggregation;

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  1. Michael Jerison, 1998. "Dispersed Excess Demands, the Weak Axiom and Uniqueness of Equilibrium," Discussion Papers, University at Albany, SUNY, Department of Economics 98-03, University at Albany, SUNY, Department of Economics.
  2. John K.-H. Quah, 1997. "The Law of Demand when Income Is Price Dependent," Econometrica, Econometric Society, Econometric Society, vol. 65(6), pages 1421-1442, November.
  3. Gael Giraud & Isabelle Maret, 2002. "Behavioral Heterogeneity in Large Economies," Working Papers of BETA 2002-04, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  4. John Quah, 2001. "Demand is Heterogenous in Grandmonts Model," Economics Series Working Papers 2001-W12, University of Oxford, Department of Economics.
  5. Michael Jerison & John K.-H. Quah, 2006. "Law of Demand," Discussion Papers, University at Albany, SUNY, Department of Economics 06-07, University at Albany, SUNY, Department of Economics.
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  1. repec:hal:journl:halshs-00155753 is not listed on IDEAS

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