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Money flexibility, price elasticity, and elasticity of marginal utility of consumption

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  • Malakhov, Sergey

Abstract

The development of G.Stigler’s original model of search describes the mathematical relationship between the elasticity of the marginal utility of consumption, the price elasticity, and the elasticity of the marginal utility of money income with respect to increase in the price of living and/or to inflation. This relationship can be used not only in economics of well-being but also in microeconomics where the increase in the price of living, i.e., in purchase price, can make consumption “bad” under the Veblen effect.

Suggested Citation

  • Malakhov, Sergey, 2014. "Money flexibility, price elasticity, and elasticity of marginal utility of consumption," MPRA Paper 55928, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:55928
    as

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    File URL: https://mpra.ub.uni-muenchen.de/55928/1/MPRA_paper_55928.pdf
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    References listed on IDEAS

    as
    1. Layard, R. & Mayraz, G. & Nickell, S., 2008. "The marginal utility of income," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1846-1857, August.
    2. Sergey Malakhov, 2014. "Satisficing Decision Procedure and Optimal Consumption-Leisure Choice," International Journal of Social Science Research, Macrothink Institute, vol. 2(2), pages 138-151, September.
    3. Jan Schumacher & Wolfgang Buchholz, 2008. "Discounting and Welfare Analysis Over Time: Choosing the ç," CESifo Working Paper Series 2230, CESifo Group Munich.
    4. Buchholz, Wolfgang & Schumacher, Jan, 2010. "Discounting and welfare analysis over time: Choosing the [eta]," European Journal of Political Economy, Elsevier, vol. 26(3), pages 372-385, September.
    5. Martin L. Weitzman, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 703-724, September.
    6. Amiel, Yoram & Creedy, John & Hurn, Stan, 1999. " Measuring Attitudes towards Inequality," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(1), pages 83-96, March.
    7. Malakhov, Sergey, 2013. "Money flexibility and optimal consumption-leisure choice under price dispersion," MPRA Paper 45197, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    money flexibility; price elasticity; elasticity of marginal utility of consumption; Veblen effect;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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