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An Expository Note on the Composite Commodity Theorem

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  • Carter, Michael

Abstract

This note offers an alternative derivation of the composite commodity theorem using only elementary economic and mathematical tools. It offers some insight as to why constancy of relative prices induces separability in the consumers optimization problem. It should be more readily accessible to students in upper level economics courses and prove useful in the classroom in presenting this central theorem of economic analysis.

Suggested Citation

  • Carter, Michael, 1995. "An Expository Note on the Composite Commodity Theorem," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(1), pages 175-179, January.
    • Handle: RePEc:spr:joecth:v:5:y:1995:i:1:p:175-79
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    Cited by:

    1. Gaston, Noel & Rajaguru, Gulasekaran, 2013. "How an export boom affects unemployment," Economic Modelling, Elsevier, vol. 30(C), pages 343-355.
    2. Junichi Minagawa & Thorsten Upmann, 2019. "Price Effects on Compound Commodities," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(2), pages 630-646, April.
    3. Ludwig von Auer & Bettina Büttner, 2004. "Endogenous Fertility, Externalities, and Efficiency in Old-Age Pension Systems," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(2), pages 294-310, June.
    4. Junichi Minagawa & Thorsten Upmann, 2016. "Price Effects on Compound Commodities," CESifo Working Paper Series 6060, CESifo.

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