An Analysis of the Substitution Effect and of Revenue Effect in the Case of the Consumer’s Theory Provided with a CES Utility Function

Catalin Angelo Ioan and Gina Ioan ()
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Gina Ioan: Danubius University of Galati, Romania

Acta Universitatis Danubius. OEconomica, 2012, issue 1(1), 164-175

Abstract: In the consumer’s theory, a crucial problem is to determine the substitution effect and the revenue effect in the case of one good price’s modifing. There exists two theories due to John Richard Hicks and Eugen Slutsky which allocates differents shares of the total change of the consumption to these effects. The paper makes an analysis between the two effects, considering the general case of a CES utility function and introduces three indicators which will characterize these shares.

Keywords: CES; substitution; revenue; utility (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:dug:actaec:y:2012:i:1:p:164-175

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