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omega - Homothetic Preferences

Bipasa Datta and Huw Dixon

Discussion Papers from Department of Economics, University of York

Abstract: This paper develops a new class of homothetic preferences which generate Marshallian demand curves for individual goods which can be concave, convex or linear in own price under the assumption that agents treat aggregate price indices as given (as in the Dixit-Stiglitz (1977) monopolistic competition model). The preferences are represented by a cost function which has two parameters: omega determining the curvature of the Marshallian demand; gamma determining the elasticity of demand when all prices are equal. The cost function has a restricted form that allows for any relevant combination of these parameters for a given number of goods.

Keywords: homothetic; duality. (search for similar items in EconPapers)
JEL-codes: D1 D2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:00/19

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