Integrability and Generalized Separability

46 Pages Posted: 17 Sep 2018 Last revised: 17 Nov 2024

Multiple version iconThere are 2 versions of this paper

Date Written: September 2018

Abstract

This paper examines demand systems where the demand for a good depends only on its own price, consumer income, and a single aggregator synthesizing information on all other prices. This generalizes directly-separable preferences where the Lagrange multiplier provides such an aggregator. As indicated by Gorman (1972), symmetry of the Slutsky substitution terms implies that such demand can take only one of two simple forms. Conversely, here we show that only weak conditions ensure that such demand systems are integrable, i.e. can be derived from the maximization of a well-behaved utility function. This paper further studies useful properties and applications of these demand systems.

Suggested Citation

Fally, Thibault, Integrability and Generalized Separability (September 2018). NBER Working Paper No. w25025, Available at SSRN: https://ssrn.com/abstract=3250542

Thibault Fally (Contact Author)

UC Berkeley - ARE Department ( email )

Berkeley, CA 94720
United States

HOME PAGE: http://are.berkeley.edu/~fally/

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