The Structure of Constant Elasticity Demand Models

Jeffrey LaFrance ()

Monash Economics Working Papers from Monash University, Department of Economics

Abstract: The demand model with constant price and income elasticities has been used extensively in applied agricultural economics. This paper analyzes the structure of incomplete systems of constant elasticity demand functions. It is demonstrated that there is a duality theory for incomplete demand systems that is analogous to the duality theory for complete systems. This theory permits the recovery of that portion of the direct and indirect preferences pertaining to the goods of interest, and we can calculate exact welfare measures for changes in income and in the prices of these goods. For an incomplete system of constant elasticity demands, the Slutsky symmetry restrictions for integrability are presented and the implied structure of the direct and indirect preferences with respect to the prices and goods of interest is derived.

Keywords: Consumer behaviour; demand models; welfare analysis (search for similar items in EconPapers)
Pages: 10 pages
Date: 1986
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Citations: View citations in EconPapers (23)

Published in American Journal of Agricultural Economics: Vol.68: Iss.3 ,543-552

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Related works:
Journal Article: The Structure of Constant Elasticity Demand Models (1986)
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