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- Title
Welfare variations and the comparative statics of demand.
- Authors
Shirai, Koji
- Abstract
By employing order-theoretic comparative statics, we provide necessary and sufficient conditions on the direct utility function (alternatively, on the indirect utility function) to guarantee that the compensating and equivalent variations are monotonically increasing in income. We also show that these conditions are sufficient to guarantee normal demand. Our results do not depend on the smoothness or strict quasiconcavity of the utility function, and can be extended to a setting with non-linear prices.
- Subjects
WELFARE economics; ECONOMIC demand; UTILITY functions; SMOOTHNESS of functions; NONLINEAR theories; MONOTONE operators; COMPARATIVE studies
- Publication
Economic Theory, 2013, Vol 53, Issue 2, p315
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s00199-011-0681-z