Comparative statics with linear objectives: normal demand, monotone marginal costs, and ranking multi-prior beliefs

Pawel Dziewulski and John Quah

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: We formulate a set order on constraint sets C ? Rl which guarantee that argmin {?(x) : x ?C} increases in the product order as C increases in the set order, for all linear functions ?: Rl ?R. Using this result, we characterize the utility/production functions that lead to normal demand; we also show that this very same class of production functions have marginal costs that increase with factor prices. In the context of decision-making under uncertainty, our new set order leads to natural generalizations of first order stochastic dominance in multi-prior models.

Keywords: parallelogram property; increasing differences; ambiguity; first order stochastic dominance; normal demand; marginal costs (search for similar items in EconPapers)
JEL-codes: C61 D21 D24 (search for similar items in EconPapers)
Date: 2021-02
New Economics Papers: this item is included in nep-mic, nep-ore and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sus:susewp:0121

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