DP12667 | Integrability and Generalized Separability

Author(s)

Publication Date

01/30/2018

JEL Code(s)

Keyword(s)

Programme Area(s)

Abstract

This paper examines demand systems where the demand for a good depends only on its own price, consumer income, and a single aggregator synthesizing information on all other prices. As indicated by Gorman (1972), symmetry of the Slutsky substitution terms implies that such demand can take only one of two simple forms. Conversely, here we show that only weak conditions ensure that such demand systems are integrable, i.e. can be derived from the maximization of a utility function. This paper further studies useful properties, special cases and applications of such demand systems.