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omega - Homothetic Preferences

Author

Listed:
  • Bipasa Datta
  • Huw D. Dixon

Abstract

This paper develops a new class of homothetic preferences which generate Marshallian demand curves for individual goods which can be concave, convex or linear in own price under the assumption that agents treat aggregate price indices as given (as in the Dixit-Stiglitz (1977) monopolistic competition model). The preferences are represented by a cost function which has two parameters: omega determining the curvature of the Marshallian demand; gamma determining the elasticity of demand when all prices are equal. The cost function has a restricted form that allows for any relevant combination of these parameters for a given number of goods.

Suggested Citation

  • Bipasa Datta & Huw D. Dixon, "undated". "omega - Homothetic Preferences," Discussion Papers 00/19, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:00/19
    as

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    File URL: https://www.york.ac.uk/media/economics/documents/discussionpapers/2000/0019.pdf
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    References listed on IDEAS

    as
    1. Mirman Leonard J. & Samuelson Larry & Schlee Edward E., 1994. "Strategic Information Manipulation in Duopolies," Journal of Economic Theory, Elsevier, vol. 62(2), pages 363-384, April.
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    3. Benassy, Jean-Pascal, 1996. "Taste for variety and optimum production patterns in monopolistic competition," Economics Letters, Elsevier, vol. 52(1), pages 41-47, July.
    4. Obstfeld, Maurice & Rogoff, Kenneth, 1995. "Exchange Rate Dynamics Redux," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 624-660, June.
    5. Oliver Hart, 1982. "A Model of Imperfect Competition with Keynesian Features," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(1), pages 109-138.
    6. Diewert, W.E., 1993. "Duality approaches to microeconomic theory," Handbook of Mathematical Economics, in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 4, volume 2, chapter 12, pages 535-599, Elsevier.
    7. Santoni, Michele, 1996. "Union-Oligopoly Sequential Bargaining: Trade and Industrial Policies," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 640-663, October.
    8. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    9. Datta, Bipasa & Dixon, Huw, 2000. "Linear-homothetic preferences," Economics Letters, Elsevier, vol. 69(1), pages 55-61, October.
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    More about this item

    Keywords

    homothetic; duality.;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D2 - Microeconomics - - Production and Organizations

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