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: Mar, 1978, Volume 46, Issue 2

Aggregate CES Input Demand with Polytomous Micro Demand<365:ACIDWP>2.0.CO;2-9
p. 365-378

Anthony G. Lawrence, Richard J. McDonald

The conditions under which aggregate CES demand behavior is consistent with polytomous choice by micro demanders are explored. Several special cases are treated in which either the relative efficiency or the relative input price is assumed to vary randomly over the micro units. In each case it is shown that the random variable must have either a log-logistic (Burr) distribution function or a generalization thereof if the aggregate and the micro behavior are to be consistent.

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