Market Demand: Theory and Empirical Evidence

Abstract

This monograph presents a new theory of market demand, the principal aim of which is to identify the conditions under which the Law of Demand holds true. The author argues that the Law of Demand is due mainly to the heterogeneity of the population of households. In his view, rationality of individual behaviour plays only a minor role. While the traditional approach to the theory of market demand is to analyze the question: to what extent are the postulated properties of individual behaviour preserved by going from individual to market demand?, this book asks the question: which properties of the market demand function are created by the aggregation process? Two hypotheses on the population of households play a key role in Hildenbrand's thinking. The first is the increasing dispersion and the second the increasing spread of households' demand. For a positive theory of market demand, according to Hildenbrand, it is more important that the hypotheses are well supported by empirical evidence. His claims are based on a nonparametric statistical data analysis of the UK Family Expenditure Survey and the French Enquete Budget de Famille.