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Identities for Homogeneous Utility Functions

Author

Listed:
  • Miguel A. Espinosa

    (London School of Economics)

  • Juan D. Prada

    (Northwestern University and Banco de la Republica)

Abstract

Using a homogeneous and continuous utility function to represent a household's preferences, we show explicit algebraic ways to go from the indirect utility function to the expenditure function and from the Marshallian demand to the Hicksian demand and vice versa, without the need of any other function. This greatly simplifies the integrability problem, avoiding the use of differential equations. In order to get this result, we prove explicit identities between most of the different objects that arise from the utility maximization and the expenditure minimization problems.

Suggested Citation

  • Miguel A. Espinosa & Juan D. Prada, 2012. "Identities for Homogeneous Utility Functions," Economics Bulletin, AccessEcon, vol. 32(3), pages 2026-2034.
    • Handle: RePEc:ebl:ecbull:eb-12-00337
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    File URL: http://www.accessecon.com/Pubs/EB/2012/Volume32/EB-12-V32-I3-P196.pdf
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    References listed on IDEAS

    as
    1. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
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    Cited by:

    1. Daniel H. Karney & Khyati Malik, 2024. "The WTP-WTA Gap for Public Goods: New Insights from Compensating and Equivalent Variation Closed-Form Solutions," Papers 2401.15493, arXiv.org, revised Jul 2024.

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    More about this item

    Keywords

    Integrability; identities; homogeneous utility function; household theory;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior

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