On the geometry of luxury
A 2-parameter class of ordinal utility functions over a pair of goods is discussed with respect to general traits of preferences for luxury. The class contains Cobb-Douglas functions as no-luxury limit; its analytical tractability is probed by simple closed form solutions for Marshallian demand functions, expansion paths, Engel curves, income elasticity of demand, saturation levels, elasticity of substitution. Following Mantovi (2013), scale and substitution effects can be represented in terms of flows on bundle space; departure from homotheticity can thereby be represented by an index of luxury which measures the noncommutativity of such effects. On conceptual grounds, our index is intimately connected with Shephard’s distance. Decompositions of productive efficiency as tailored by Bogetoft et al. (2006) represent a natural setting for the application of our approach.
|Date of creation:||2013|
|Contact details of provider:|| Postal: Via J.F. Kennedy 6, 43100 PARMA (Italy)|
Web page: http://economia.unipr.it/de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Daniel L. McFadden, 2013. "The New Science of Pleasure," NBER Working Papers 18687, National Bureau of Economic Research, Inc.
- Hurwicz,Leonid & Reiter,Stanley, 2008.
"Designing Economic Mechanisms,"
Cambridge University Press, number 9780521724104, October.
- Hurwicz,Leonid & Reiter,Stanley, 2006. "Designing Economic Mechanisms," Cambridge Books, Cambridge University Press, number 9780521836418, October.
- Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
- Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
- Blackorby, Charles & Russell, R Robert, 1989. "Will the Real Elasticity of Substitution Please Stand Up? (A Comparison of the Allen/Uzawa and Morishima Elasticities)," American Economic Review, American Economic Association, vol. 79(4), pages 882-888, September.
- Andrea Mantovi, 2013. "On the commutativity of expansion and substitution effects," Journal of Economics, Springer, vol. 110(1), pages 83-105, September.
- Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, October.
- Hicks, John, 1970. "Elasticity of Substitution Again: Substitutes and Complements," Oxford Economic Papers, Oxford University Press, vol. 22(3), pages 289-296, November.
- Cornes,Richard, 1992. "Duality and Modern Economics," Cambridge Books, Cambridge University Press, number 9780521336017, October.
- Robert Chambers & Thomas Mitchell, 2001. "Homotheticity and Non-Radial Changes," Journal of Productivity Analysis, Springer, vol. 15(1), pages 31-39, January.
- Bogetoft, Peter & Fare, Rolf & Obel, Borge, 2006. "Allocative efficiency of technically inefficient production units," European Journal of Operational Research, Elsevier, vol. 168(2), pages 450-462, January.
- Bogetoft, Peter & Fare, Rolf, 1999. "Allocative Efficiency of Technically Inefficient Production Units," Unit of Economics Working papers 24217, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
- Paolo Bertoletti & Giorgio Rampa, 2013. "On inferior inputs and marginal returns," Journal of Economics, Springer, vol. 109(3), pages 303-313, July.
- Chipman, John S & Moore, James C, 1980. "Compensating Variation, Consumer's Surplus, and Welfare," American Economic Review, American Economic Association, vol. 70(5), pages 933-949, December.
- Paolo Bertoletti, 2005. "Elasticities of Substitution and Complementarity: A Synthesis," Journal of Productivity Analysis, Springer, vol. 24(2), pages 183-196, October. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:par:dipeco:2013-ep02. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Andrea Lasagni)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.