On Why the Wold-Juréen (1953) Utility Function Cannot Generate a Giffen Good
Bishop's University - Department of Economics
July 7, 2009
Presently, it is widely accepted that the particular utility function first reported by Wold and Juréen (1953), and later by Weber (1997), is capable of generating a Giffen good. This note challenges this view by showing that this Wold-Juréen (1953) utility function is not well-behaved, and that, as a consequence, it does not satisfy the second-order condition for an interior maximum related to the consumer-maximization problem. In view of this, it is argued here that: (a) not only is this utility function incapable of generating a Giffen good, but by extension (b) the so-called demand functions reported by Weber (1997) are not demand functions.
Number of Pages in PDF File: 7
JEL Classification: A2, D1working papers series
Date posted: July 8, 2009
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