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Demand Functions with Inferior Goods: The Implicit Function Approach

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  • Takahashi, Shuji

Abstract

In this article, we propose a numerically computable utility function that can apply to inferior goods. The implicit function and its optimization technique are fully used. Since the implicit function is carefully formulated, it works well as a standard utility function. This technique ensures tractability and extendability. We propose the following: (1) a simple utility function of an inferior good which contains only two parameters; (2) a total cost function and its extension to the Cobb-Douglas production function with an inferior input; (3) a generalized utility function whose Engel-curve always stems from the origin.

Suggested Citation

  • Takahashi, Shuji, 2019. "Demand Functions with Inferior Goods: The Implicit Function Approach," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 60(1), pages 79-105, June.
    • Handle: RePEc:hit:hitjec:v:60:y:2019:i:1:p:79-105
    DOI: 10.15057/30363
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    References listed on IDEAS

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    1. Epstein, Gil S & Spiegel, Uriel, 2000. "A Production Function with an Inferior Input," Manchester School, University of Manchester, vol. 68(5), pages 503-515, September.
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    Cited by:

    1. Shuji Takahashi, 2021. "The Income-Demand Curve: Implicit Function and Data Analysis Methods," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(1), pages 51-66, March.

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    More about this item

    Keywords

    inferior goods; utility function; production function; implicit function;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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