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Demand and equilibrium with inferior and Giffen behaviors

Le Van, Cuong and Pham, Ngoc-Sang (2019): Demand and equilibrium with inferior and Giffen behaviors.

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Abstract

We introduce a class of differentiable, strictly increasing, strictly concave utility functions exhibiting an explicit demand of a good which may have Giffen behavior. We provide a necessary and sufficient condition (bases on prices and consumers’ preferences and income) under which this good is normal, inferior or Giffen good. Interestingly, with this utility, the equilibrium price of a good may increase in the aggregate supply for this good.

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