The Substitution Effect from the Profit Function in Consumption: Expressions from the Marshallian, Hicksian, and Frischian demand functions
DOI:
https://doi.org/10.17811/ebl.7.3.2018.92-97Abstract
In the context of the optimizing behaviour assumption of individuals (Becker, 1976), three types of demand functions appear: Marshallian, Hicksian, and Frischian functions (Sproule, 2013). The Substitution Effect (SE) is a relevant concept, with our short paper developing two alternative theoretical expressions, specifically focusing on the Profit Function in Consumption and the Frischian functions. I address the fact that these demand functions with constant marginal utility of income play a very relevant role in the inter-temporal context.
References
Altonji, J. G. (1986) Intertemporal substitution in labor supply: evidence from micro data, Journal of Political Economy, 94, S176-S215.
Ashenfleter, O., and Heckman, J. J. (1974) The Estimation of Income and Substitution Ef-fects in a Model of Family Labor Supply, Econometrica, 42, 73-85.
Becker, G. (1976) The Economic Approach to Human Behavior, The University of Chicago Press.
Browning, M. (1982) Profit function representations for consumer preferences, Bristol Univer-sity Discussion Paper No 82/125.
Brandt, L., Siow, A., and Wang, J. (2013) Substitution effects in parental investments, Jour-nal of Population Economics, 28, 423-462.
Frisch, R. (1932) New Methods of Measuring Marginal Utility, Verlag Von J. C. B. Mohr, Tü-bingen.
Frisch, R. (1959) A complete scheme for computing all direct and cross demand elasticities in a model with many sectors, Econometrica 27, 177-196.
Houthakker, H. S. (1960) Additive preferences, Econometrica, 28, 244-256.
Manoli, D., and Weber, A. (2010) Intertemporal substitution in labor force participation: evi-dence from policy discontinuities, IZA Discussion Paper No. 5248.
Molina, J. A. (2011) Household Economic Behaviors, Springer.
Sproule, R. (2013) A systematic analysis of the link amongst the Marshallian, Hicksian, and Frischian demand functions: A note, Economic Letters, 121, 555-557.
Downloads
Published
How to Cite
Issue
Section
License
The works published in this journal are subject to the following terms:
1. Oviedo University Press (the publisher) retains the property rights (copyright) of published works, and encourages and enables the reuse of the same under the license specified in paragraph 2.
© Ediuno. Ediciones de la Universidad de Oviedo / Oviedo University Press
2. The works are published in the online edition of the journal under a Creative Commons Attribution-Non Commercial-Non Derives 3.0 Spain (legal text). You can copy, use, distribute, transmit and publicly display, provided that: i) you cite the author and the original source of publication (journal, publisher and URL of the work), ii) they are not used for commercial purposes, iii) mentions the existence and specifications of this license.
3. Conditions of self-archiving. The author can archive the post-print version of the article (publisher’s version) on the author’s personal website and/or on the web of the institution where he belong, including a link to the page of the journal and putting the way of citation of the work. Economics and Business Letters and its URL https://reunido.uniovi.es/index.php/EBL/index are the only authorized source for correctly giving the reference of the publisher’s version in every mention of the article.