The Uncompensated Law of Demand: A ‘Revealed Preference’ approach

Edwin Franks and William D.A. Bryant

Economics Letters, 2017, vol. 152, issue C, 105-111

Abstract: Milleron and Malinvaud (1974), Mityushin and Polterovich (1978) and others, provide conditions under which the Uncompensated Law of Demand (ULD) holds. These conditions are based on properties of the consumer’s (unobservable) utility function. In this paper we introduce the new idea of a ‘Giffen commodity vector’ and show how, in terms of it and the derivative of a consumer’s inverse demand, a new necessary and sufficient condition for the ULD may be obtained. As both the Giffen vector and a consumer’s inverse demand are observable, this allows us to obtain a ‘Revealed Preference’ style necessary and sufficient condition for the ULD without relying on conditions based on unobservables such as differential or curvature properties of a consumer’s utility function.

Keywords: Uncompensated Law of Demand; Monotone; Giffen commodity vector; Giffen price vector; Inverse demand; Observables (search for similar items in EconPapers)
JEL-codes: D1 D5 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:152:y:2017:i:c:p:105-111

DOI: 10.1016/j.econlet.2017.01.010

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