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Single Peakedness and Giffen Demand

Author

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  • Massimiliano Landi

    (School of Economics, Singapore Management Unversity)

Abstract

I provide a simple example of a single peaked utility function that generates a Giffen demand. The utility function is smooth, non piecewise defined, strictly concave but not globally increasing. A full characterization of the parameter conditions under which the Giffen demand arises is provided. In addition the properties of the demand function are studied: I find that the inferior commodity with a Giffen demand must be cheaper relatively to a substitue and that Giffen demand arises at relatively low levels of income. However it is not required that the share of income spent on that commodity be large.

Suggested Citation

  • Massimiliano Landi, 2012. "Single Peakedness and Giffen Demand," Working Papers 02-2012, Singapore Management University, School of Economics.
    • Handle: RePEc:siu:wpaper:02-2012
    as

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    File URL: https://mercury.smu.edu.sg/rsrchpubupload/19738/Giffeng_refv3.pdf
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    References listed on IDEAS

    as
    1. Goettler, Ronald L & Shachar, Ron, 2001. "Spatial Competition in the Network Television Industry," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 624-656, Winter.
    2. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    3. repec:bla:manchs:v:68:y:2000:i:3:p:349-59 is not listed on IDEAS
    4. Vandermeulen, Daniel C, 1972. "Upward Sloping Demand Curves Without the Giffen Paradox," American Economic Review, American Economic Association, vol. 62(3), pages 453-458, June.
    5. Junko Doi & Kazumichi Iwasa & Koji Shimomura, 2012. "Giffen Behavior Independent of the Wealth Level," Lecture Notes in Economics and Mathematical Systems, in: Wim Heijman & Pierre Mouche (ed.), New Insights into the Theory of Giffen Goods, pages 105-126, Springer.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Giffen behavior; Utility function; Single peakedness; Expenditure share.;
    All these keywords.

    JEL classification:

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

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