Connected Substitutes and Invertibility of Demand

Steven Berry (), Amit Gandhi and Philip Haile

No 17193, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We consider the invertibility of a nonparametric nonseparable demand system. Invertibility of demand is important in several contexts, including identification of demand, estimation of demand, testing of revealed preference, and economic theory requiring uniqueness of market clearing prices. We introduce the notion of "connected substitutes" and show that this structure is sufficient for invertibility. The connected substitutes conditions require weak substitution between all goods and sufficient strict substitution to necessitate treating them in a single demand system. These conditions are satisfied in many standard models, have transparent economic interpretation, and allow us to show invertibility without functional form restrictions, smoothness assumptions, or strong domain restrictions.

JEL-codes: C3 D01 (search for similar items in EconPapers)
Date: 2011-07
Note: IO TWP
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published as Steven Berry, Amit Gandhi and Philip Haile (2013), \Connected Substitutes and Invertibility of Demand," Econometrica v. 81(5) (September), pp. 2087-2111 (also Cowles Foundation Discussion Paper # 1806R.)

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Related works:
Journal Article: Connected Substitutes and Invertibility of Demand (2013)
Working Paper: Connected Substitutes and Invertibility of Demand (2012)
Working Paper: Connected Substitutes and Invertibility of Demand (2012)
Working Paper: Connected Substitutes and Invertibility of Demand (2011)
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