Not So Demanding: Demand Structure and Firm Behavior
Monika Mrazova () and
J. Peter Neary ()
No 11119, CEPR Discussion Papers from C.E.P.R. Discussion Papers
We show that any well-behaved demand function can be represented by its demand manifold, a smooth curve which relates the elasticity and convexity of demand. This manifold is a sufficient statistic for many comparative statics questions; leads naturally to characterizations of new families of demand functions which nest most of those used in applied economics; and connects assumptions about demand structure with firm behavior and economic performance. In particular, we show that the demand manifold leads to new insights about industry adjustment with heterogeneous firms, and provides a quantitative framework for measuring the effects of globalization.
Keywords: Heterogeneous Firms; Pass-Through; Quantifying Responses to Trade Liberalization; Super- and Sub-Convexity; Supermodularity (search for similar items in EconPapers)
JEL-codes: F12 F15 F23 (search for similar items in EconPapers)
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Journal Article: Not So Demanding: Demand Structure and Firm Behavior (2017)
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