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Identities For Homogeneous Utility Functions

Author

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  • Miguel A. Espinosa
  • Juan D. Prada-Sarmiento

Abstract

Using a homogeneous and continuous utility function that represents a household's preferences, this paper proves explicit identities between most of the different objects that arise from the utility maximization and the expenditure minimization problems. The paper also outlines the homogeneity properties of each object. Finally, 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, thus simplifying the integrability problem avoiding the use of differential equations.

Suggested Citation

  • Miguel A. Espinosa & Juan D. Prada-Sarmiento, 2010. "Identities For Homogeneous Utility Functions," Documentos CEDE 7611, Universidad de los Andes, Facultad de Economía, CEDE.
    • Handle: RePEc:col:000089:007611
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    File URL: https://repositorio.uniandes.edu.co/bitstream/handle/1992/8192/dcede2010-26.pdf
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    References listed on IDEAS

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    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

    Identities; homogeneous utility functions and household theory.;

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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