Quasi-linear peferences with Auspitz-Lieben-Pareto complementarity

Christian Weber

Economics Bulletin, 2004, vol. 4, issue 12, 1-5

Abstract: I show that if preferences are quasi-linear (non-linear in goods x1, …, xn but linear in xn+1) and the sub-utility function defined over [x1, …, xn] is strongly concave and exhibits Auspitz-Lieben-Pareto complementarity, then goods x1-xn must be gross and compensated complements for each other and xn+1 must be a compensated substitute for all other goods. Also, an increase in its price of xn+1 must reduce the demand for goods x1-xn. The effects of uncompensated changes in the prices of goods x1-xn on the demand for good xn+1 vary predictably with income.

Keywords: Auspitz-Lieben-Pareto; complementarity (search for similar items in EconPapers)
JEL-codes: D1 (search for similar items in EconPapers)
Date: 2004-08-10
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