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omega - Homothetic Preferences

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  • Bipasa Datta
  • Huw D. Dixon

Abstract

This paper develops a new class of homothetic preferences which generate Marshallian demand curves for individual goods which can be concave, convex or linear in own price under the assumption that agents treat aggregate price indices as given (as in the Dixit-Stiglitz (1977) monopolistic competition model). The preferences are represented by a cost function which has two parameters: omega determining the curvature of the Marshallian demand; gamma determining the elasticity of demand when all prices are equal. The cost function has a restricted form that allows for any relevant combination of these parameters for a given number of goods.

Suggested Citation

  • Bipasa Datta & Huw D. Dixon, "undated". "omega - Homothetic Preferences," Discussion Papers 00/19, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:00/19
    as

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    File URL: https://www.york.ac.uk/media/economics/documents/discussionpapers/2000/0019.pdf
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    References listed on IDEAS

    as
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    7. Santoni, Michele, 1996. "Union-Oligopoly Sequential Bargaining: Trade and Industrial Policies," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 640-663, October.
    8. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    9. Datta, Bipasa & Dixon, Huw, 2000. "Linear-homothetic preferences," Economics Letters, Elsevier, vol. 69(1), pages 55-61, October.
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    More about this item

    Keywords

    homothetic; duality.;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D2 - Microeconomics - - Production and Organizations

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