Money flexibility and optimal consumption-leisure choice under price dispersion

Sergey Malakhov

MPRA Paper from University Library of Munich, Germany

Abstract: The synthesis of the G.Sigler’s rule of the optimal search with the classical individual labor supply model enlarges the understanding of the phenomenon of money flexibility. The constraints of the search model makes the Lagrangian multiplier equal to the marginal utility of the wage rate and establish the correspondence between the purchase price elasticity of the marginal utility of consumption expenditures, the wage rate elasticity of the marginal utility of money, and the wage rate elasticity of purchase prices. This correspondence can review the “leisure model” of behavior as well as the Veblen effect. The phenomenon of the sunk costs sensitivity also becomes more understandable.

Keywords: money flexibility; consumption leisure choice; search; Veblen effect (search for similar items in EconPapers)
JEL-codes: D11 D83 (search for similar items in EconPapers)
Date: 2013-03-07
New Economics Papers: this item is included in nep-upt
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Citations: View citations in EconPapers (10)

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Related works:
Journal Article: MONEY FLEXIBILITY AND OPTIMAL CONSUMPTION-LEISURE CHOICE UNDER PRICE DISPERSION (2013)
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