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Normality of demand in a two-goods setting

Laurens Cherchye (), Thomas Demuynck () and Bram De Rock

Journal of Economic Theory, 2018, vol. 173, issue C, 361-382

Abstract: We study the testable implications of normal demand in a two-goods setting. For a finite dataset on prices and quantities, we present the revealed preference conditions for normality of one or both goods. Our characterization provides an intuitive extension of the well-known Weak Axiom of Revealed Preference, and is easy to use in practice. We illustrate the empirical relevance of our theoretical results through an application to an experimental dataset. We also briefly discuss extensions of our conditions to a setting with more than two goods.

Keywords: Revealed preference; Normality; Substitution effect (search for similar items in EconPapers)
JEL-codes: D01 D11 (search for similar items in EconPapers)
Date: 2018
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Related works:
Working Paper: Normality of Demand in a Two-Goods Setting (2018)
Working Paper: Normality of Demand in a Two-Goods Setting (2016) Downloads
Working Paper: Normality of demand in a two-goods setting (2016) Downloads
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