A Note on Consumer Surplus and the Structure of Preferences
Paolo Bertoletti ()
No 130, DEM Working Papers Series from University of Pavia, Department of Economics and Management
We represent quasi-linear preferences by the dual measure of consumer surplus, and investigate demand and the associated multiproduct pricing. In particular, we discuss the role of substitutability "within group" and with the outside commodity, deriving a Slutsky-like decomposition of the price effect. We use our results to show that Ramsey prices are proportional to marginal costs only if preferences are fully homothetic, and that commodities with larger outside substitutability have smaller Lerner indexes.
Keywords: Quasi-Linear Preferences; Homotheticity; Ramsey Pricing (search for similar items in EconPapers)
JEL-codes: D11 D43 D61 (search for similar items in EconPapers)
Pages: 20 pages
New Economics Papers: this item is included in nep-com and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:pav:demwpp:demwp0130
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