Linearity, Slutsky symmetry, and a conjecture of Hicks

Christian Weber

Economics Bulletin, 2002, vol. 4, issue 12, 1-5

Abstract: Hicks (1956) conjectured that Slutsky symmetry should hold for discrete as well as infinitesimal price changes if demand functions are globally linear. This paper proves this conjecture using the LES utility function and the Slutsky compensation for price changes. More importantly, in sharp contrast to previous doubts expressed by Hicks, Samuelson and others, this paper provides the first formal demonstration that compensated cross price effects can indeed be symmetric for discrete changes in prices.

JEL-codes: D1 (search for similar items in EconPapers)
Date: 2002-07-08
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Citations: View citations in EconPapers (3)

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