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Linear-homothetic preferences

Datta, Bipasa and Dixon, Huw David 2000. Linear-homothetic preferences. Economics Letters 69 (1) , pp. 55-61. 10.1016/S0165-1765(00)00262-7

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This paper develops a new class of linear homothetic (LH) preferences that result in Marshallian demands that are linear in price under the assumption that agents take aggregate price indeces as given (as in monopolistic competition). The preferences are represented by a cost-function that has one parameter, which can be interpreted as the elasticity of demand when all prices are equal. The cost-function has a restricted form that allows the elasticity of demand to be compatible with any number of commodities.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
Uncontrolled Keywords: Duality; Homothetic; Linear
Publisher: Elsevier
ISSN: 0165-1765
Last Modified: 04 Jun 2017 04:24

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