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omega - Homothetic Preferences

Author

Listed:
  • Bipasa Datta
  • Huw D. Dixon

Abstract

This paper develops a new class of homothetic preferences which generate Marshallian demand curves for individual goods which can be concave, convex or linear in own price under the assumption that agents treat aggregate price indices as given (as in the Dixit-Stiglitz (1977) monopolistic competition model). The preferences are represented by a cost function which has two parameters: omega determining the curvature of the Marshallian demand; gamma determining the elasticity of demand when all prices are equal. The cost function has a restricted form that allows for any relevant combination of these parameters for a given number of goods.

Suggested Citation

  • Bipasa Datta & Huw D. Dixon, "undated". "omega - Homothetic Preferences," Discussion Papers 00/19, Department of Economics, University of York.
  • Handle: RePEc:yor:yorken:00/19
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    File URL: https://www.york.ac.uk/media/economics/documents/discussionpapers/2000/0019.pdf
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    References listed on IDEAS

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    1. Mirman Leonard J. & Samuelson Larry & Schlee Edward E., 1994. "Strategic Information Manipulation in Duopolies," Journal of Economic Theory, Elsevier, vol. 62(2), pages 363-384, April.
    2. 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.
    3. Diewert, W.E., 1993. "Duality approaches to microeconomic theory," Handbook of Mathematical Economics,in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 4, volume 2, chapter 12, pages 535-599 Elsevier.
    4. Obstfeld, Maurice & Rogoff, Kenneth, 1995. "Exchange Rate Dynamics Redux," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 624-660, June.
    5. Benassy, Jean-Pascal, 1996. "Taste for variety and optimum production patterns in monopolistic competition," Economics Letters, Elsevier, vol. 52(1), pages 41-47, July.
    6. Santoni, Michele, 1996. "Union-Oligopoly Sequential Bargaining: Trade and Industrial Policies," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 640-663, October.
    7. Datta, Bipasa & Dixon, Huw, 2000. "Linear-homothetic preferences," Economics Letters, Elsevier, vol. 69(1), pages 55-61, October.
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    More about this item

    Keywords

    homothetic; duality.;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D2 - Microeconomics - - Production and Organizations

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