CONDITIONAL DEMAND FUNCTIONS AND THE IMPLICATIONS OF SEPARABLE UTILITY.
The purpose of this paper is to derive and explain the implications for consumer behavior of the three principal separability hypotheses: the utility tree, block additivity and additivity.[1] Although most of the results are not new, this paper does more than summarize known results and collect them...
| Published in: | Southern Economic Journal Vol. 37; no. 4; pp. 423 - 434 |
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| Format: | Article |
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Wiley-Blackwell
Apr71
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| Online Access: | View this record in EBSCOhost |
| Summary: | The purpose of this paper is to derive and explain the implications for consumer behavior of the three principal separability hypotheses: the utility tree, block additivity and additivity.[1] Although most of the results are not new, this paper does more than summarize known results and collect them in one place. In the literature on separability, primary if not exclusive emphasis has been placed on the implications of separability for the partial derivatives of the demand functions. In this paper primary emphasis is placed on the implications of separability for the demand functions themselves. The effects of finite price and income changes--which have been neglected in the literature --are also considered. All derivations are based on the use of a new tool--"conditional demand functions"--and the derivations are much more simple than those which have appeared in the literature. No mathematics beyond the rule for taking the derivative of functions of a function is involved, and the mathematical arguments have a straightforward economic interpretation. |
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