Econometrica

Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Jul, 1983, Volume 51, Issue 4

On the "Law of Demand"

https://doi.org/0012-9682(198307)51:4<997:OT"OD>2.0.CO;2-S
p. 997-1020

Werner Hildenbrand

If all individuals of a given group have the same consumption behavior described by a common demand function f(p,w), which is assumed to satisfy the weak axion of revealed preference, and if the distribution of individual total expenditure w is given by a decreasing density p, with p(O) > 0, then we show that the market demand function F(p) = 2ff(p,w)p(w) dw is monotone, i.e., for any two price vectors p and q one has (q - p). (F(q) - F(p)) @<0. Thus, all partial market demand curves are decreasing. Furthermore, if the expansion paths of f for two different price vectors are different then we show that F is strictly monotone, which implies that the market demand function F satisfies the weak axiom of revealed preference. The result is applied to prove uniqueness and global stability in distribution economies and special exchange economies.

Log In To View Full Content

Journal News

View