Endogenous Prices in a Riemannian Geometry Framework

François Gardes ()
Additional contact information
François Gardes: Centre d'Economie de la Sorbonne, Paris School of Economics & Western Catholic University, https://cv.archives-ouvertes.fr/francois-gardes

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: Economic agents decide often under different price conditions (named endogenous prices), and moreover these individual price systems may depend on their previous choices. Such a situation appears for instance for consumers' choices under constraints which imply virtual costs or when non-monetary resources add to the monetary budget constraint. In case where no market exist which regulates these prices and make them converge toward a common price for all agents, observed differences appear between the social distribution of consumer expenditures and their change over time which are modelized here using Riemannian geometry. Observations in a cross-sectional survey are supposed to constitute a Riemannian surface (where each point is associated with a particular price system). Social differences are measured along the geodesics of the Riemannian surface, while changes over time correspond to movements along their tangent spaces (characterized by constant endogenous prices). The Riemannian curvature of the consumptiion space is thus estimated comparing the derivatives over the surface (corresponding to cross-section differences) to those of the tangent plane (corresponding to the time changes). The Riemannian curvature being shown to be non-null for the Polish consumers surveyed in a four years Polish panel, implies that usual econometric methods based on a unique metric over the (cross-sectional) consumption space are inadequate to estimate geodesics (corresponding to optimal choices) on the Riemannian surface. The curvature of the survey can be linked to changes in latent endogenous prices over the Riemannian surface, which are for instance full prices in a domestic production framework. Finally, the Riemannian structure is used to study the path dependency of consumers' choices

Keywords: Spatial autocorrelation, Riemannian geometry; curvature; virtual price; full price; path dependency (search for similar items in EconPapers)
JEL-codes: C31 C33 C55 D11 D12 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2021-07
New Economics Papers: this item is included in nep-isf
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://mse.univ-paris1.fr/pub/mse/CES2021/21026.pdf (application/pdf)
https://halshs.archives-ouvertes.fr/halshs-03325414

Related works:
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:mse:cesdoc:21026

Access Statistics for this paper

More papers in Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne Contact information at EDIRC.
Bibliographic data for series maintained by Lucie Label ().