Abstract

We propose a new bivariate utility function for the analysis of Giffen behavior. The function is strictly concave and twice continuously differentiable, with marginal utilities that are strictly positive. The function is defined by a single equation, rather than by two or more “spliced” functional forms. We contend that, in the search for Giffen-compatible utility functions, it is helpful to consider explicitly the elasticities of the consumer’s marginal rate of substitution with respect to the quantities of the two goods.

Full Text
Paper version not known

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call