Demand Functions with Inferior Goods: The Implicit Function Approach

Shuji Takahashi

Hitotsubashi Journal of Economics, 2019, vol. 60, issue 1, 79-105

Abstract: In this article, we propose a numerically computable utility function that can apply to inferior goods. The implicit function and its optimization technique are fully used. Since the implicit function is carefully formulated, it works well as a standard utility function. This technique ensures tractability and extendability. We propose the following: (1) a simple utility function of an inferior good which contains only two parameters; (2) a total cost function and its extension to the Cobb-Douglas production function with an inferior input; (3) a generalized utility function whose Engel-curve always stems from the origin.

Keywords: inferior goods; utility function; production function; implicit function (search for similar items in EconPapers)
JEL-codes: D01 D11 D21 (search for similar items in EconPapers)
Date: 2019
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:hit:hitjec:v:60:y:2019:i:1:p:79-105

DOI: 10.15057/30363

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