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Price responsiveness and market conditions

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  • Braulke, Michael

Abstract

Edlefsen [3] has shown that a phenomenon of great similarity to the strong LeChatelier principle can be established when altering the feasible set of an optimizing agent by suitably replacing existing constraints rather than adding new ones. Here it was demonstrated that essentially the same phenomenon occurs when altering the objective function in a systematic manner rather than the.feasible set. The result obtained is general enough to allow a replication of Edlefsen's analysis of a household choosing between quantity and quality when facing hedonic prices, and served here furthermore in an application to the theory of the firm where it was demonstrated that a systematic relationship exists between the intensity of the reactions of a producer to changes in a conjugate parameter and the conditions prevailing in his markets.

Suggested Citation

  • Braulke, Michael, 1982. "Price responsiveness and market conditions," Discussion Papers, Series I 166, University of Konstanz, Department of Economics.
    • Handle: RePEc:zbw:kondp1:166
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    References listed on IDEAS

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    1. Eichhorn, Wolfgang & Oettli, Werner, 1972. "A General Formulation of the Lechatelier-Samuelson Principle," Econometrica, Econometric Society, vol. 40(4), pages 711-717, July.
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    4. D. V. T. Bear, 1965. "Inferior Inputs and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 73(3), pages 287-287.
    5. Edlefsen, Lee E, 1981. "The Comparative Statics of Hedonic Price Functions and Other Nonlinear Constraints," Econometrica, Econometric Society, vol. 49(6), pages 1501-1520, November.
    6. Silberberg, Eugene, 1974. "A revision of comparative statics methodology in economics, or, how to do comparative statics on the back of an envelope," Journal of Economic Theory, Elsevier, vol. 7(2), pages 159-172, February.
    7. Tatsuo Hatta, 1980. "Structure of the Correspondence Principle at an Extremum Point," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(5), pages 987-997.
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