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Title:Comparative statics for a consumer with possibly multiple optimum consumption bundles PDF Logo
Authors:Dasgupta, Indraneel
Pattanaik, Prasanta K.
Issue Date:2010
Series/Report no.:IZA Discussion Papers 4818
Abstract:Non-positivity of the generalized substitution effect, non-positivity of the own-price substitution effect, homogeneity of degree zero in all prices and income, and the law of demand are some of the most primitive comparative static results in the standard revealed preference theory of consumers' behaviour. These results are however derived for demand functions. The literature does not have corresponding comparative static results for the more plausible case of demand correspondences, where the consumer is permitted to have multiple chosen bundles in a given price-income situation. Using the revealed preference approach to the theory of consumers' behaviour, this note establishes such results for demand correspondences; the analysis can be readily adapted to prove corresponding results in the preference-based approach.
Subjects:Demand correspondence
weak axiom of revealed preference
non-positivity of generalized substitution effect
non-positivity of own-price substitution effect
homogeneity of degree zero
law of demand
JEL:D11
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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