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Demand Conditions under Multidimensional Pricing

In: Econometrics and Economic Theory

Author

Listed:
  • Lawrence H. Officer

    (Michigan State University)

Abstract

The unidimensional nature of microeconomic analysis has been subjected recently to long-overdue criticism, on the grounds of its distance from reality.1 It is stressed by critics that a product should be defined not in terms of a one-dimensional unit of measurement but rather in terms of its attributes, aspects or characteristics which generally are multidimensional. Nevertheless, this ‘abstract-product’ approach, to use Baumol’s terminology, remains in a primitive state. Advances have been most noteworthy in the theory of consumer demand. Yet even the most elegant studies in this field — those of Baumol [1] and Lancaster [3] — suffer from oversimplified models. Thus Baumol [1, p. 682] must resort to artificial devices to cope with his assumption of completely inelastic demand for any one consumer, and Lancaster makes the strong assumption that the characteristics of a product are identical for all consumers. Quite apart from unrealistic assumptions, however, their models suffer a fundamental deficiency: pricing according to attributes, i.e. multidimensional pricing is not considered.

Suggested Citation

  • Lawrence H. Officer, 1974. "Demand Conditions under Multidimensional Pricing," Palgrave Macmillan Books, in: Willy Sellekaerts (ed.), Econometrics and Economic Theory, chapter 13, pages 261-284, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-01936-6_13
    DOI: 10.1007/978-1-349-01936-6_13
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    Cited by:

    1. Ethridge, Don E. & Davis, Bob, 1982. "Hedonic Price Estimation For Commodities: An Application To Cotton," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 7(2), pages 1-8, December.

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