Not so demanding: Preference structure, firm behavior, and welfare

J. Peter Neary and Monika Mrazova ()

No 691, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: We introduce two new tools for relating preferences and demand to firm behavior and economic performance. The "Demand Manifold" links the elasticity and convexity of an arbitrary demand function; the "Utility Manifold" links the elasticity and concavity of an arbitrary utility function. Along the way we present some new families of demand functions; show how the structure of demand and preferences determine the responses of monopoly firms and monopolistically competitive industries to exogenous shocks; characterize the efficiency of amonopolistically competitive equilibrium; and present a quantitative framework for predicting the welfare effects of exogenous shocks.

Keywords: Heterogeneous Firms; Quantifying Gains from Trade; Super- and Sub-Convexity; Supermodularity (search for similar items in EconPapers)
JEL-codes: F12 F15 F23 (search for similar items in EconPapers)
Date: 2013-12-31
New Economics Papers: this item is included in nep-bec, nep-com, nep-int and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

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