Beyond CES: Three Alternative Classes of Flexible Homothetic Demand Systems

Kiminori Matsuyama
Authors registered in the RePEc Author Service: Philip Ushchev

No 12210, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We characterize three classes of demand systems, all of which are defined non-parametrically: homothetic demand systems with a single aggregator (HSA), those with direct implicit additivity (HDIA), and those with indirect implicit additivity (HIIA). In HSA, all the cross-price effects are captured by one price aggregator, while in HDIA and in HIIA, they are captured by two price aggregators. Each of these three classes contains CES as a special case. Yet, they are pairwise disjoint with the sole exception of CES. Thus, these classes of homothetic demand systems offer us three alternative ways of departing from CES.

Keywords: Homothetic preferences; Crs production functions; Demand systems with a single aggregator; Direct implicit additivity; Indirect implicit additivity; Ces; Translog; Gross complements and gross substitutes (search for similar items in EconPapers)
JEL-codes: D11 D21 (search for similar items in EconPapers)
Date: 2017-08
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (42)

Downloads: (external link)
https://cepr.org/publications/DP12210 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Beyond Ces: Three Alternative Classes of Flexible Homothetic Demand Systems (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:12210

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP12210

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().