A strictly-concave, non-spliced, Giffen-compatible utility function

Daniel K. Biederman

Economics Letters, 2015, vol. 131, issue C, 24-28

Abstract: We propose a new bivariate utility function for the analysis of Giffen behavior. The function is strictly concave and twice continuously differentiable, with marginal utilities that are strictly positive. The function is defined by a single equation, rather than by two or more “spliced” functional forms. We contend that, in the search for Giffen-compatible utility functions, it is helpful to consider explicitly the elasticities of the consumer’s marginal rate of substitution with respect to the quantities of the two goods.

Keywords: Utility function; Giffen behavior; Elasticity of marginal rate of substitution (search for similar items in EconPapers)
JEL-codes: D11 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:131:y:2015:i:c:p:24-28

DOI: 10.1016/j.econlet.2015.03.024

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