Econometrica: Jul 1966, Volume 34, Issue 3

Household Production and Consumer Demand Functions

https://doi.org/0012-9682(196607)34:3<699:HPACDF>2.0.CO;2-6
p. 699-708

Richard F. Muth

This paper considers the hypothesis that commodities purchased on the market by consumers are inputs into the production of goods within the household. Its implications for the family of consumer demand functions whose arguments are real income and relative prices are drawn and compared with those of the hypothesis of additive separability. The paper closes with some examples of differences in commodity demand elasticities which are qualitatively consistent with the household production hypothesis and some comments upon how the latter might be utilized in empirical work.

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