The General Theory of Household and Market Contingent Demand

Huw Dixon

The Manchester School of Economic & Social Studies, 1987, vol. 55, issue 3, 287-304

Abstract: This paper examines the theory of contingent demand for price-setting firms when some firms may choose not to satisfy all de mand for their output. The paper develops the theory of household con tingent demand using the theory of effective demand developed by Benn assy (1978). Using the Slutsky decomposition, the author finds that t he income effect is weaker for contingent demand than for the Marshal lian demand. At the level of the market, the rationing regime operati ng for lower-priced sellers is crucial. Under a random first-come-fir st-served scheme, contingent demand for higher-priced sellers is nons tochastic if households have homothetic preferences. Copyright 1987 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1987
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Persistent link: https://EconPapers.repec.org/RePEc:bla:manch2:v:55:y:1987:i:3:p:287-304

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