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The General Theory of Household and Market Contingent Demand


  • Dixon, Huw


This paper examines the theory of contingent demand for price-setting firms when some firms may choose not to satisfy all de mand for their output. The paper develops the theory of household con tingent demand using the theory of effective demand developed by Benn assy (1978). Using the Slutsky decomposition, the author finds that t he income effect is weaker for contingent demand than for the Marshal lian demand. At the level of the market, the rationing regime operati ng for lower-priced sellers is crucial. Under a random first-come-fir st-served scheme, contingent demand for higher-priced sellers is nons tochastic if households have homothetic preferences. Copyright 1987 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Dixon, Huw, 1987. "The General Theory of Household and Market Contingent Demand," The Manchester School of Economic & Social Studies, University of Manchester, vol. 55(3), pages 287-304, September.
  • Handle: RePEc:bla:manch2:v:55:y:1987:i:3:p:287-304

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    References listed on IDEAS

    1. F. Giavazzi & L. Spaventa, 1990. "The "New" EMS," Working Papers 86, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, January.
    3. Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
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    Cited by:

    1. Rees, Ray, 1993. "Collusive Equilibrium in the Great Salt Duopoly," Munich Reprints in Economics 3413, University of Munich, Department of Economics.
    2. Raymond J. Deneckere & Dan Kovenock, 1992. "Price Leadership," Review of Economic Studies, Oxford University Press, vol. 59(1), pages 143-162.
      • Raymond Deneckere & Dan Kovenock, 1988. "Price Leadership," Discussion Papers 773, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    3. Dave Furth & Dan Kovenock, 1993. "Price leadership in a duopoly with capacity constraints and product differentiation," Journal of Economics, Springer, vol. 57(1), pages 1-35, February.
    4. John Bennett & Huw Dixon & Helen X.Y. Hu, 2008. "The Effects of Reforming the Chinese Dual-Track Price System," CEDI Discussion Paper Series 08-14, Centre for Economic Development and Institutions(CEDI), Brunel University.
    5. Bennett, John & Dixon, Huw & Hu, Helen X.Y., 2013. "The transition from dual-track pricing to a market system: Winners and losers," Economic Systems, Elsevier, vol. 37(1), pages 30-44.

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