Single Peakedness and Giffen Demand

Massimiliano Landi

No 02-2012, Working Papers from Singapore Management University, School of Economics

Abstract: I provide a simple example of a single peaked utility function that generates a Giffen demand. The utility function is smooth, non piecewise defined, strictly concave but not globally increasing. A full characterization of the parameter conditions under which the Giffen demand arises is provided. In addition the properties of the demand function are studied: I find that the inferior commodity with a Giffen demand must be cheaper relatively to a substitue and that Giffen demand arises at relatively low levels of income. However it is not required that the share of income spent on that commodity be large.

Keywords: Giffen behavior; Utility function; Single peakedness; Expenditure share. (search for similar items in EconPapers)
JEL-codes: D11 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2012-01
New Economics Papers: this item is included in nep-mic and nep-sea
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Published in SMU Economics and Statistics Working Paper Series

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