Base consumption levels and fixed costs
Conditioning variables on consumer choices are conventionally included in demand functions additively. We identify the underlying utility maximisation problem. There must be base consumption levels efficiently set which vary with the conditioning variables. A special case is quasi-homothetic preferences.
References listed on IDEAS
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- James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
- Ariely, Dan & Loewenstein, George & Prelec, Drazen, 2006.
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Journal of Economic Behavior & Organization,
Elsevier, vol. 60(1), pages 1-10, May.
- John Conlisk, 1996. "Why Bounded Rationality?," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 669-700, June.
- Donald, Stephen G. & Hamermesh, Daniel S., 2009. "A structural model of the fixed time costs of market work," Economics Letters, Elsevier, vol. 104(3), pages 125-128, September.
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