The Exact Insensitivity of Market Budget Shares and the "Balancing Effect"

Gaël Giraud and Isabelle Maret ()
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Isabelle Maret: BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique

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Abstract: We reformulate Grandmont's and its successors' notion of behavioral heterogeneity such as to get the exact insensitivity of the aggregate budget share function with respect to changes in prices and income, instead of a mere approximate insensitivity. We propose a non parametric set-up such that, if the population is distributed according to some "uniform" probability measure, the aggregate budget share function is constant. The important contribution is that this exact insensitivity is not explained by any insensitivity at the microeconomic level but rather by an exact "balancing effect". We give illustrative examples of populations that fulfill our requirements.

Keywords: Law of demand; Balancing effect; Behavioral heterogeneity; Aggregation of demand; Large economy; Économie non-atomique; Effet de balancement; Hétérogénéité; Agrégation de la demande; Loi de la demande (search for similar items in EconPapers)
Date: 2007-06
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00155753v1
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Published in 2007

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Related works:
Working Paper: The Exact Insensitivity of Market Budget Shares and the "Balancing Effect" (2007)
Working Paper: The exact insensitivity of market budget shares and the "balancing effect" (2007)
Working Paper: The Exact Insensitivity of Market Budget Shares and the 'Balancing Effect' (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00155753

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