Generalized Separability and Integrability: Consumer Demand with a Price Aggregator

Thibault Fally

No 17249, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper examines demand systems where the demand for a good depends on other prices only through a common price aggregator (a scalar function of all prices). We refer to this property as ``generalized separability'' and provide the functional forms of demand that this property implies when demand is rational, i.e., derived from utility maximization. Generalized separability imposes restrictions on either income or price effects, and greater flexibility is obtained by adding indirect utility as an additional aggregator. We provide examples and applications which encompass a large variety of examples from the literature. In particular, generalized separability can be used in simple general-equilibrium models to obtain a more tractable framework and yet generate a wider range of effects of market size and productivity on firm size, entry, and prices.

Keywords: Consumer demand; Separability; Price aggregator; Integrability; Rationalization; Non-homothetic preferences (search for similar items in EconPapers)
JEL-codes: D11 D40 L13 (search for similar items in EconPapers)
Date: 2022-04
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP17249 (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:
Journal Article: Generalized separability and integrability: Consumer demand with a price aggregator (2022)
Working Paper: Generalized Separability and Integrability: Consumer Demand with a Price Aggregator (2022)
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:17249

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP17249

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 ().