Demand and equilibrium with inferior and Giffen behaviors

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

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inferior good, Giffen good, equilibrium price.
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D51 - Exchange and Production Economies

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