Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/64545
Authors: 
Friedman, Daniel
Sákovics, József
Year of Publication: 
2011
Series/Report no.: 
Working Papers, UC Santa Cruz Economics Department 684
Abstract: 
We reformulate neoclassical consumer choice by focusing on [lambda], the marginal utility of money. As the opportunity cost of current expenditure, [lambda] is approximated by the slope of the indirect utility function of the continuation. We argue that [lambda] can largely supplant the role of an arbitrary budget constraint in partial equilibrium analysis. The result is a better grounded, more exible and more intuitive approach to consumer choice.
Subjects: 
budget constraint
separability
value for money
JEL: 
D01
D03
D11
Document Type: 
Working Paper

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