Small Income Effects: A Marshallian Theory of Consumer Surplus and Downward Sloping Demand.
The author formalizes the Marshallian idea t hat when the proportion of income spent on any commodity is small then the incom e effects are small. If n is the number of goods, the author shows that the orde r of magnitude of the norm of the income derivative of demand is1/an. As a coro llary for the case of a single price change, the percentage error in approximati ng the Hicksian Deadweight Loss by its Marshallian counterpart goes to zero at l east at the rate 1/an and demand is downward sloping for n sufficiently large. Copyright 1987 by The Review of Economic Studies Limited.
Year of publication: |
1987
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Authors: | Vives, Xavier |
Published in: |
Review of Economic Studies. - Wiley Blackwell, ISSN 0034-6527. - Vol. 54.1987, 1, p. 87-103
|
Publisher: |
Wiley Blackwell |
Saved in:
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