Demand Conditions under Multidimensional Pricing

Lawrence H. Officer
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Lawrence H. Officer: Michigan State University

Chapter 13 in Econometrics and Economic Theory, 1974, pp 261-284 from Palgrave Macmillan

Abstract: Abstract The unidimensional nature of microeconomic analysis has been subjected recently to long-overdue criticism, on the grounds of its distance from reality.1 It is stressed by critics that a product should be defined not in terms of a one-dimensional unit of measurement but rather in terms of its attributes, aspects or characteristics which generally are multidimensional. Nevertheless, this ‘abstract-product’ approach, to use Baumol’s terminology, remains in a primitive state. Advances have been most noteworthy in the theory of consumer demand. Yet even the most elegant studies in this field — those of Baumol [1] and Lancaster [3] — suffer from oversimplified models. Thus Baumol [1, p. 682] must resort to artificial devices to cope with his assumption of completely inelastic demand for any one consumer, and Lancaster makes the strong assumption that the characteristics of a product are identical for all consumers. Quite apart from unrealistic assumptions, however, their models suffer a fundamental deficiency: pricing according to attributes, i.e. multidimensional pricing is not considered.

Keywords: Demand Function; Supply Curve; Demand Condition; Pure Competition; Intermediate Vector (search for similar items in EconPapers)
Date: 1974
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DOI: 10.1007/978-1-349-01936-6_13

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