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Quasi-linear peferences with Auspitz-Lieben-Pareto complementarity

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  • Christian Weber

    (Seattle University)

Abstract

I show that if preferences are quasi-linear (non-linear in goods x1, …, xn but linear in xn+1) and the sub-utility function defined over [x1, …, xn] is strongly concave and exhibits Auspitz-Lieben-Pareto complementarity, then goods x1-xn must be gross and compensated complements for each other and xn+1 must be a compensated substitute for all other goods. Also, an increase in its price of xn+1 must reduce the demand for goods x1-xn. The effects of uncompensated changes in the prices of goods x1-xn on the demand for good xn+1 vary predictably with income.

Suggested Citation

  • Christian Weber, 2004. "Quasi-linear peferences with Auspitz-Lieben-Pareto complementarity," Economics Bulletin, AccessEcon, vol. 4(12), pages 1-5.
    • Handle: RePEc:ebl:ecbull:eb-04d10001
    as

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    References listed on IDEAS

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    • D1 - Microeconomics - - Household Behavior

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